Shipping Corporation of India Land and Assets (NSE:SCILAL) Is Reducing Its Dividend To ₹0.55

Shipping Corporation of India Land and Assets Limited (NSE:SCILAL) has announced that on 17th of October, it will be paying a dividend of₹0.55, which a reduction from last year's comparable dividend. This means the annual payment is 1.1% of the current stock price, which is above the average for the industry.

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Shipping Corporation of India Land and Assets Might Find It Hard To Continue The Dividend

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Despite not generating a profit, Shipping Corporation of India Land and Assets is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

EPS could fall quite dramatically over the next 12 months if recent trends continue. This could force the company to make difficult decisions around continuing payouts to shareholders or putting additional pressure on the balance sheet.

Check out our latest analysis for Shipping Corporation of India Land and Assets

Shipping Corporation of India Land and Assets Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Over the last year, Shipping Corporation of India Land and Assets' EPS has fallen by 514%. A large drop like this could indicate a major challenge in the business, and could certainly flow through to reduced dividend payments. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

We're Not Big Fans Of Shipping Corporation of India Land and Assets' Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for Shipping Corporation of India Land and Assets (2 are significant!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.