Mahindra Logistics (NSE:MAHLOG) Will Pay A Dividend Of ₹2.50

Mahindra Logistics Limited's (NSE:MAHLOG) investors are due to receive a payment of ₹2.50 per share on 20th of August. This means that the annual payment will be 0.8% of the current stock price, which is in line with the average for the industry.

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Mahindra Logistics' Future Dividend Projections Seem Positive

Unless the payments are sustainable, the dividend yield doesn't mean too much. While Mahindra Logistics is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.

According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 27%, so there isn't too much pressure on the dividend.

Check out our latest analysis for Mahindra Logistics

Mahindra Logistics Doesn't Have A Long Payment History

Mahindra Logistics' 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. The annual payment during the last 7 years was ₹1.50 in 2018, and the most recent fiscal year payment was ₹2.50. This implies that the company grew its distributions at a yearly rate of about 7.6% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 54% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Mahindra Logistics (1 can't be ignored!) that you should be aware of before investing. Is Mahindra Logistics not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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