Jullundur Motor Agency (Delhi) (NSE:JMA) Will Pay A Dividend Of ₹2.00

Jullundur Motor Agency (Delhi) Limited (NSE:JMA) has announced that it will pay a dividend of ₹2.00 per share on the 28th of September. Based on this payment, the dividend yield on the company's stock will be 2.0%, which is an attractive boost to shareholder returns.

See our latest analysis for Jullundur Motor Agency (Delhi)

Jullundur Motor Agency (Delhi)'s Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Jullundur Motor Agency (Delhi) was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 15.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 17% by next year, which is in a pretty sustainable range.

Jullundur Motor Agency (Delhi) Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 9 years was ₹0.80 in 2015, and the most recent fiscal year payment was ₹2.00. This means that it has been growing its distributions at 11% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Jullundur Motor Agency (Delhi) has impressed us by growing EPS at 16% per year over the past five years. Jullundur Motor Agency (Delhi) definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Jullundur Motor Agency (Delhi) Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For example, we've picked out 2 warning signs for Jullundur Motor Agency (Delhi) that investors should know about before committing capital to this stock. Is Jullundur Motor Agency (Delhi) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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