Accelya Solutions India (NSE:ACCELYA) Is Reducing Its Dividend To ₹25.00

Accelya Solutions India Limited (NSE:ACCELYA) is reducing its dividend to ₹25.00 on the 15th of Februarywhich is 29% less than last year's comparable payment of ₹35.00. The dividend yield of 3.7% is still a nice boost to shareholder returns, despite the cut.

Check out our latest analysis for Accelya Solutions India

Accelya Solutions India'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. Prior to this announcement, Accelya Solutions India was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Over the next year, EPS could expand by 6.1% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 58%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the annual payment back then was ₹60.00, compared to the most recent full-year payment of ₹65.00. Dividend payments have grown at less than 1% a year over this period. 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 Accelya Solutions India's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Accelya Solutions India has been growing its earnings per share at 6.1% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On Accelya Solutions India's Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Accelya Solutions India is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Accelya Solutions India that investors should know about before committing capital to this stock. Is Accelya Solutions India not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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