PNC Infratech (NSE:PNCINFRA) Is Paying Out A Dividend Of ₹0.60
PNC Infratech Limited (NSE:PNCINFRA) has announced that it will pay a dividend of ₹0.60 per share on the 29th of October. Including this payment, the dividend yield on the stock will be 0.2%, which is a modest boost for shareholders' returns.
PNC Infratech's Future Dividend Projections Appear Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive. PNC Infratech is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. 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.
The next year is set to see EPS grow by 5.6%. If the dividend continues on this path, the payout ratio could be 2.3% by next year, which we think can be pretty sustainable going forward.
Check out our latest analysis for PNC Infratech
PNC Infratech Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was ₹0.30 in 2015, and the most recent fiscal year payment was ₹0.60. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
PNC Infratech Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. PNC Infratech has seen EPS rising for the last five years, at 7.7% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.
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. For example, we've identified 2 warning signs for PNC Infratech (1 is significant!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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