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Greenlam Industries' (NSE:GREENLAM) Dividend Will Be Reduced To ₹0.40

Simply Wall St · 06/15 02:07

Greenlam Industries Limited's (NSE:GREENLAM) dividend is being reduced from last year's payment covering the same period to ₹0.40 on the 30th of August. This means that the annual payment is 0.2% of the current stock price, which is lower than what the rest of the industry is paying.

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Greenlam Industries' Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Greenlam Industries 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 exponentially over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 3.8%, so there isn't too much pressure on the dividend.

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NSEI:GREENLAM Historic Dividend June 15th 2025

View our latest analysis for Greenlam Industries

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from ₹0.05 total annually to ₹0.40. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Dividend Growth May Be Hard To Come By

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's not great to see that Greenlam Industries' earnings per share has fallen at approximately 5.3% per year over the past five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

The Dividend Could Prove To Be Unreliable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Greenlam Industries is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Greenlam Industries (of which 1 can't be ignored!) you should know about. Is Greenlam Industries not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.