Matrimony.com (NSE:MATRIMONY) Is Increasing Its Dividend To ₹5.00

Matrimony.com Limited (NSE:MATRIMONY) has announced that it will be increasing its dividend from last year's comparable payment on the 11th of September to ₹5.00. This makes the dividend yield about the same as the industry average at 0.6%.

See our latest analysis for Matrimony.com

Matrimony.com's Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Matrimony.com's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 75.9%. If the dividend continues on this path, the payout ratio could be 16% by next year, which we think can be pretty sustainable going forward.

Matrimony.com Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The annual payment during the last 4 years was ₹1.50 in 2018, and the most recent fiscal year payment was ₹5.00. This implies that the company grew its distributions at a yearly rate of about 35% over that duration. Matrimony.com has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Matrimony.com May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, Matrimony.com's EPS was effectively flat over the past five years, which could stop the company from paying more every year. If Matrimony.com is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Matrimony.com's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Matrimony.com that investors need to be conscious of moving forward. Is Matrimony.com not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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