Krystal Integrated Services (NSE:KRYSTAL) Is Paying Out A Dividend Of ₹1.50
The board of Krystal Integrated Services Limited (NSE:KRYSTAL) has announced that it will pay a dividend of ₹1.50 per share on the 16th of October. The dividend yield is 0.2% based on this payment, which is a little bit low compared to the other companies in the industry.
Krystal Integrated Services' Payment Could Potentially Have Solid Earnings Coverage
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Krystal Integrated Services is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
If the trend of the last few years continues, EPS will grow by 30.1% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 3.6% by next year, which is in a pretty sustainable range.
View our latest analysis for Krystal Integrated Services
Krystal Integrated Services Doesn't Have A Long Payment History
Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Krystal Integrated Services has been growing its earnings per share at 30% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Krystal Integrated Services' payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Krystal Integrated Services in our latest insider ownership analysis. Is Krystal Integrated Services not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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