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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Pilani Investment and Industries Corporation Limited (NSE:PILANIINVS) has paid a dividend to shareholders. It currently yields 1.0%. Let’s dig deeper into whether Pilani Investment and Industries should have a place in your portfolio.
See our latest analysis for Pilani Investment and Industries
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is their annual yield among the top 25% 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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Is is able to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does Pilani Investment and Industries fare?
The current trailing twelve-month payout ratio for the stock is 16.6%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
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. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. The reality is that it is too early to consider Pilani Investment and Industries as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Pilani Investment and Industries has a yield of 1.0%, which is on the low-side for Capital Markets stocks.
Next Steps:
After digging a little deeper into Pilani Investment and Industries’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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. Below, I’ve compiled three important factors you should further research: