Stock Analysis

Sun TV Network (NSE:SUNTV) Has Announced That Its Dividend Will Be Reduced To ₹2.50

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Sun TV Network Limited (NSE:SUNTV) is reducing its dividend from last year's comparable payment to ₹2.50 on the 12th of April. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Sun TV Network

Sun TV Network's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Sun TV Network's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 3.8% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 36%, which is comfortable for the company to continue in the future.

NSEI:SUNTV Historic Dividend March 16th 2023

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ₹9.50 in 2013, and the most recent fiscal year payment was ₹13.75. This works out to be a compound annual growth rate (CAGR) of approximately 3.8% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

We Could See Sun TV Network's Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Sun TV Network has been growing its earnings per share at 8.9% a year over the past five years. Sun TV Network definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Sun TV Network Looks Like A Great Dividend Stock

Overall, we think that Sun TV Network could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Sun TV Network that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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