OnMobile Global (NSE:ONMOBILE) Has Affirmed Its Dividend Of ₹1.50

OnMobile Global Limited's (NSE:ONMOBILE) investors are due to receive a payment of ₹1.50 per share on 29th of October. This payment means the dividend yield will be 1.2%, which is below the average for the industry.

Check out our latest analysis for OnMobile Global

OnMobile Global's Earnings Easily Cover the Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, OnMobile Global was paying a whopping 116% as a dividend, but this only made up 31% of its overall earnings. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 74.3% if recent trends continue. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

OnMobile Global Doesn't Have A Long Payment History

It is great to see that OnMobile Global has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from ₹1.00 in 2012 to the most recent annual payment of ₹1.50. This works out to be a compound annual growth rate (CAGR) of approximately 4.6% a year over that time. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

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. OnMobile Global has impressed us by growing EPS at 74% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On OnMobile Global's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 3 warning signs for OnMobile Global that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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