TCI Express (NSE:TCIEXP) Has Affirmed Its Dividend Of ₹2.00

The board of TCI Express Limited (NSE:TCIEXP) has announced that it will pay a dividend of ₹2.00 per share on the 2nd of September. This means the annual payment will be 0.5% of the current stock price, which is lower than the industry average.

Check out our latest analysis for TCI Express

TCI Express' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, TCI Express was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 27.9% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

TCI Express Doesn't Have A Long Payment History

It is great to see that TCI Express 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. Since 2017, the dividend has gone from ₹1.60 total annually to ₹8.00. This means that it has been growing its distributions at 38% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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. TCI Express has impressed us by growing EPS at 28% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like TCI Express' Dividend

Overall, we like to see the dividend staying consistent, and we think TCI Express might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for TCI Express (of which 1 is significant!) you should know about. Is TCI Express not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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