Gujarat State Petronet (NSE:GSPL) Is Paying Out A Dividend Of ₹5.00

Gujarat State Petronet Limited (NSE:GSPL) has announced that it will pay a dividend of ₹5.00 per share on the 18th of October. Based on this payment, the dividend yield will be 1.5%, which is fairly typical for the industry.

See our latest analysis for Gujarat State Petronet

Gujarat State Petronet's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Gujarat State Petronet's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

EPS is set to fall by 50.8% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 38%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Gujarat State Petronet Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was ₹1.00, compared to the most recent full-year payment of ₹5.00. This means that it has been growing its distributions at 17% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See Gujarat State Petronet's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Gujarat State Petronet has grown earnings per share at 8.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Gujarat State Petronet's prospects of growing its dividend payments in the future.

We Really Like Gujarat State Petronet's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

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 Gujarat State Petronet that investors should know about before committing capital to this stock. Is Gujarat State Petronet not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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