Alkyl Amines Chemicals (NSE:ALKYLAMINE) shareholders will receive a larger dividend than last year
The advice of Alkyl Amines Chemicals Limited (NSE:ALKYLAMINE) announced that it will increase its dividend on August 31 to ₹10.00. Despite this increase, the dividend yield of 0.4% is only a modest increase in shareholder return.
Check out our latest analysis for Alkyl Amines Chemicals
Alkyl Amines Chemicals dividend well covered by earnings
While yield is important, another factor to consider regarding a company’s dividend is whether current payout levels are achievable. However, the profits of Alkyl Amines Chemicals easily cover the dividend. This means most of his income is kept to grow the business.
Looking ahead, earnings per share are expected to fall 4.0% over the next year. Assuming the dividend continues on recent trends, we think the payout ratio could be 20%, which is pretty good to us and we think it’s doable on an earnings basis.
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the past 10 years. Since 2012, the dividend has increased from ₹0.60 to ₹10.00. This implies that the company has increased its distributions at an annual rate of approximately 32% over this period. It’s great to see strong growth in dividend payouts, but cuts are concerning as it may indicate that the payout policy is too ambitious.
The dividend should increase
Earnings per share growth could be a mitigating factor given past dividend fluctuations. Alkyl Amines Chemicals has seen BPA increase over the past five years, at 39% per year. Rapid earnings growth and a low payout ratio suggest that this company has indeed reinvested in its business. If this continues, this company could have a bright future.
Alkyl Amines Chemicals Looks Like a Big Dividend Stock
In summary, it is always positive to see the dividend increase, and we are particularly satisfied with its overall sustainability. The company generates a lot of cash, and the earnings also quite easily cover the distributions. If earnings fall over the next 12 months, the dividend could be shaken up a bit, but we don’t think that should cause too much of a problem in the long run. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.
Companies with a stable dividend policy are likely to enjoy greater investor interest than those that suffer from a more inconsistent approach. However, there are other things for investors to consider when analyzing stock performance. For example, we chose 2 warning signs for Alkyl Amines chemicals that investors should be aware of before committing capital to this security. Alkyl Amines Chemicals not quite the opportunity you were looking for? Why not check out our selection of the best dividend stocks.
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