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Important news for shareholders and potential investors in Greaves Cotton Limited (NSEI:GREAVESCOT): The dividend payment of ₹4 per share will be distributed into shareholder on 27 February 2018, and the stock will begin trading ex-dividend at an earlier date, 14 February 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Greaves Cotton’s most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Greaves Cotton
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it paying an annual yield above 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has the amount of dividend per share grown over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Greaves Cotton pass our checks?
The company currently pays out 72.94% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 46.72%, leading to a dividend yield of around 3.23%. However, EPS should increase to ₹7.88, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although GREAVESCOT’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Greaves Cotton generates a yield of 4.18%, which is high for Machinery stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Greaves Cotton is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three fundamental aspects you should further examine: