Sirca Paints India (NSE:SIRCA) Is Paying Out A Dividend Of ₹1.50

Sirca Paints India Limited (NSE:SIRCA) has announced that it will pay a dividend of ₹1.50 per share on the 28th of September. The dividend yield is 0.4% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Sirca Paints India

Sirca Paints India's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Sirca Paints India was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 31.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 18%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sirca Paints India Doesn't Have A Long Payment History

Sirca Paints India's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the annual payment back then was ₹0.75, compared to the most recent full-year payment of ₹1.50. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. Sirca Paints India 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Sirca Paints India has impressed us by growing EPS at 12% per year over the past five years. Sirca Paints India definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Sirca Paints India's Dividend

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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Sirca Paints India that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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.