Entertainment Network (India) (NSE:ENIL) Is Due To Pay A Dividend Of ₹1.00

Entertainment Network (India) Limited (NSE:ENIL) has announced that it will pay a dividend of ₹1.00 per share on the 27th of October. This payment means the dividend yield will be 0.6%, which is below the average for the industry.

Check out our latest analysis for Entertainment Network (India)

Entertainment Network (India)'s Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. While Entertainment Network (India) is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Over the next year, EPS is forecast to expand by 125.0%. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 93% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Entertainment Network (India) Is Still Building Its Track Record

It is great to see that Entertainment Network (India) has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. There hasn't been much of a change in the dividend over the last 9 years. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Entertainment Network (India)'s earnings per share has shrunk at 59% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Entertainment Network (India)'s Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think Entertainment Network (India) is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Entertainment Network (India) that you should be aware of before investing. Is Entertainment Network (India) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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