Over the past year, India's market has shown remarkable growth, surging by 45%, despite a recent flat performance over the last 7 days. In this context, dividend stocks can be particularly appealing for investors looking for steady income streams, especially when earnings are expected to grow by 16% annually.
Overview: Gulf Oil Lubricants India Limited is a company that manufactures, markets, and trades lubricants for the automobile and industrial sectors in India, with a market capitalization of approximately ₹56.80 billion.
Operations: Gulf Oil Lubricants India Limited generates its revenue primarily from the sale of lubricants, totaling ₹33.01 billion.
Dividend Yield: 3.5%
Gulf Oil Lubricants India has shown notable growth with earnings increasing by 32.6% over the past year, and its Price-To-Earnings ratio of 18.4x is attractive compared to the Indian market average of 32.8x. The company has a history of raising dividends over the last decade, supported by a reasonable payout ratio of 57.4% and cash payout ratio of 62.7%, ensuring dividends are well-covered by both earnings and cash flow. However, its dividend track record has been marked by volatility, reflecting some inconsistency in payments despite recent performance improvements and strategic financial management decisions evident from recent shareholder communications and executive changes.
Overview: ITC Limited operates in various sectors including fast-moving consumer goods, hotels, paperboards and paper, packaging, agriculture, and information technology both in India and internationally, with a market capitalization of approximately ₹5.31 trillion.
Operations: ITC Limited generates revenue from several segments, including ₹33.67 billion from FMCG - Cigarettes, ₹21.00 billion from FMCG - Others, ₹16.12 billion from Agri Business, ₹8.34 billion from Paperboards, Paper & Packaging, and ₹3.10 billion from Hotels.
Dividend Yield: 3.2%
ITC Limited reported a revenue increase to INR 795.68 billion for FY2024 from INR 784.99 billion in the previous year, with net income also rising to INR 204.59 billion from INR 191.92 billion. Despite a growing dividend, declared at INR 7.50 per share for FY2024, concerns persist as the dividend coverage by cash flows remains low with a cash payout ratio of 126.1%. The Price-To-Earnings ratio at 26x is below the Indian market average, indicating potential value relative to peers despite challenges in sustaining dividend payments without adequate cash flow support.
Overview: PTC India Limited operates in the trading of power across India, Nepal, Bhutan, and Bangladesh, with a market capitalization of approximately ₹62.24 billion.
Operations: PTC India Limited generates revenue primarily through its power trading segment, which brought in ₹160.12 billion, and its financing business, contributing ₹7.67 billion.
Dividend Yield: 3.7%
PTC India Limited's recent financial performance shows a decline in quarterly net income from INR 1,165.9 million to INR 862.6 million, despite stable yearly revenue growth to INR 168.05 billion. The company declared a final dividend of INR 7.80 per share, supported by earnings with a payout ratio of 54% and robust cash flows evidenced by a low cash payout ratio of 9.4%. However, the dividend track record over the past decade has been volatile and unreliable, raising concerns about future stability despite current coverage levels.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NSEI:GULFOILLUB NSEI:ITC and NSEI:PTC.
