Apar Industries (NSE:APARINDS) Increases Dividend to ₹15.00

Apar Industries Limited (NSE:APARINDS) will increase its dividend from last year’s comparable payout on September 11 to ₹15.00. This will bring the dividend yield to an attractive 1.5%, giving shareholder returns a nice boost.

While the dividend yield is important for income investors, it’s also important to take into account any large changes in share price, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Apar Industries stock price has risen 45% in the past 3 months, which is good for shareholders and may also explain a lower dividend yield.

Discover our latest analysis for Apar Industries

Apar Industries dividend is well covered by earnings

We like to see strong dividend yields, but that doesn’t matter if the payout isn’t sustainable. However, Apar Industries’ profits easily cover the dividend. This means that most of what the business earns is used to help it grow.

Looking ahead, earnings per share are expected to grow 11.4% over the next year. If the dividend continues to follow recent trends, we estimate the payout ratio to be 20%, which is within the range that allows us to be comfortable with the sustainability of the dividend.

NSEI: APARINDS Historic Dividend July 17, 2022

Dividend volatility

Although the company has a long history of dividends, it has been cut at least once in the past 10 years. As of 2012, the annual payment at the time was ₹7.00, compared to the most recent annual payment of ₹15.00. This means that it increased its distributions by 7.9% per year during this period. We like to see dividends growing at a reasonable pace, but with at least a substantial reduction in payouts, we’re not sure this dividend stock would be ideal for someone who intends to live on income.

Apar Industries could increase its dividend

Since the dividend has been reduced in the past, we need to check if earnings are increasing and if this could lead to higher dividends in the future. We are encouraged to see that Apar Industries has increased earnings per share by 7.9% per year over the past five years. A low payout ratio and decent growth suggest the company is reinvesting well, and also has plenty of room to grow the dividend over time.

Our opinion on the Apar Industries dividend

In summary, it’s great to see that the company can increase the dividend and keep it within a sustainable range. The dividend has always been at reasonable levels, but this has not translated into a regular payout. Given all of this, the dividend looks viable going forward, but investors should keep in mind that the company has pushed the boundaries of sustainability in the past and could do so again.

Companies with a stable dividend policy are likely to enjoy greater investor interest than those that suffer from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, these are not the only factors our readers should be aware of when evaluating a company. Pushing the debate a little further, we have identified 2 warning signs for Apar Industries that investors should be aware of going forward. Apar Industries isn’t quite the opportunity you were looking for? Why not check out our selection of the best dividend stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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