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On the 24 November 2018, HeidelbergCement India Limited (NSE:HEIDELBERG) will be paying shareholders an upcoming dividend amount of ₹1.00 per share. However, investors must have bought the company’s stock before 05 November 2018 in order to qualify for the payment. That means you have only 4 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into HeidelbergCement India’s latest financial data to analyse its dividend attributes.
Check out our latest analysis for HeidelbergCement India
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has it increased its dividend per share amount over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does HeidelbergCement India fit our criteria?
The current trailing twelve-month payout ratio for the stock is 31%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 25%, leading to a dividend yield of around 1.9%. However, EPS should increase to ₹9.86, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view HeidelbergCement India as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether HEIDELBERG one as a stable dividend player.
Compared to its peers, HeidelbergCement India has a yield of 1.7%, which is high for Basic Materials stocks but still below the market’s top dividend payers.
Next Steps:
Taking all the above into account, HeidelbergCement India is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three fundamental aspects you should further research: