Netweb Technologies India (NSE:NETWEB) Has Announced That It Will Be Increasing Its Dividend To ₹2.50

The board of Netweb Technologies India Limited (NSE:NETWEB) has announced that it will be paying its dividend of ₹2.50 on the 29th of September, an increased payment from last year's comparable dividend. Although the dividend is now higher, the yield is only 0.1%, which is below the industry average.

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Netweb Technologies India's Payment Could Potentially Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Netweb Technologies India was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share is forecast to rise by 138.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 4.6%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Netweb Technologies India

Netweb Technologies India Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. 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 Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Netweb Technologies India has impressed us by growing EPS at 97% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Our Thoughts On Netweb Technologies India's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Netweb Technologies India's payments are rock solid. While Netweb Technologies India is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Netweb Technologies India in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.