Anant Raj (NSE:ANANTRAJ) Has Affirmed Its Dividend Of ₹0.73

Anant Raj Limited (NSE:ANANTRAJ) will pay a dividend of ₹0.73 on the 22nd of August. Including this payment, the dividend yield on the stock will be 0.1%, which is a modest boost for shareholders' returns.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Anant Raj's Payment Could Potentially Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, based ont he last payment, Anant Raj was earning enough to cover the dividend pretty comfortably. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.

Over the next year, EPS is forecast to expand by 142.4%. If the dividend continues on this path, the payout ratio could be 2.8% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Anant Raj

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of ₹0.24 in 2015 to the most recent total annual payment of ₹0.73. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Anant Raj has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Anant Raj has impressed us by growing EPS at 66% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Our Thoughts On Anant Raj's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Anant Raj's payments, as there could be some issues with sustaining them into the future. While Anant Raj is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for Anant Raj for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.