Does Wendt (India) Limited (NSE:WENDT) Have A Place In Your Dividend Portfolio?




  • In Business
  • 2019-06-17 07:49:00Z
  • By Simply Wall St.
 

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Dividend paying stocks like Wendt (India) Limited (NSE:WENDT) tend to be popular with investors, and for good reason - some research suggests a significant amount of all stock market returns come from reinvested dividends. On the other hand, investors have been known to buy a stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.

Investors might not know much about Wendt (India)'s dividend prospects, even though it has been paying dividends for the last nine years and offers a 1.2% yield. A 1.2% yield is not inspiring, but the longer payment history has some appeal. When buying stocks for their dividends, you should always run through the checks below, to see if the dividend looks sustainable.

Explore this interactive chart for our latest analysis on Wendt (India)!

Payout ratios

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. In the last year, Wendt (India) paid out 39% of its profit as dividends. A medium payout ratio strikes a good balance between paying dividends, and keeping enough back to invest in the business. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.

Remember, you can always get a snapshot of Wendt (India)'s latest financial position, by checking our visualisation of its financial health.

Dividend Volatility

One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. Looking at the last decade of data, we can see that Wendt (India) paid its first dividend at least nine years ago. It's good to see that Wendt (India) has been paying a dividend for a number of years. However, the dividend has been cut at least once in the past, and we're concerned that what has been cut once, could be cut again. During the past nine-year period, the first annual payment was ₹25.00 in 2010, compared to ₹30.00 last year. This works out to be a compound annual growth rate (CAGR) of approximately 2.0% a year over that time. Wendt (India)'s dividend payments have fluctuated, so it hasn't grown 2.0% every year, but the CAGR is a useful rule of thumb for approximating the historical growth.

Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Dividend Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share (EPS) are growing. Why take the risk of a dividend getting cut, unless there's a good chance of bigger dividends in future? Wendt (India) has grown its earnings per share at 5.7% per annum over the past five years. It's good to see decent earnings growth and a low payout ratio. Companies with these characteristics often display the fastest dividend growth over the long term - assuming earnings can be maintained, of course.

Conclusion

To summarise, shareholders should always check that Wendt (India)'s dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. First, we like that the company's dividend payments appear well covered, although the retained capital also needs to be effectively reinvested. Second, earnings growth has been ordinary, and its history of dividend payments is chequered - having cut its dividend at least once in the past. Overall we think Wendt (India) is an interesting dividend stock, although it could be better.

You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Wendt (India) stock.

We have also put together a list of global stocks with a market capitalisation above $1bn and yielding more 3%.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

COMMENTS

More Related News

India investing $60 billion on gas grid to link up nation by 2024
India investing $60 billion on gas grid to link up nation by 2024

India, one of the world's largest consumers of oil and coal, is investing $60 billion to build a national gas grid and import terminals by 2024 in a bid to cut its carbon emissions, the oil minister said on Sunday. India has struggled to boost its use of gas, which produces less greenhouse gas emissions than coal and oil, because many industries and towns are not linked to the gas pipeline network. Oil Minister Dharmendra Pradhan told reporters at India Energy Forum by Ceraweek that companies were investing $60 billion in the network and building new gas import facilities to link all states by mid-2024, when the government's term ends.

Xi becomes 1st Chinese president in 2 decades to visit Nepal
Xi becomes 1st Chinese president in 2 decades to visit Nepal

Xi Jinping on Saturday became the first Chinese president in more than two decades to visit Nepal, where he is expected to sign agreements on several infrastructure projects. Xi arrived Saturday from India, where he met with Indian Prime Minister Narendra Modi. Nepal is expected to tread cautiously while building relations with big neighbors India and China.

At summit to mend ties, Modi, Xi see common challenge on
At summit to mend ties, Modi, Xi see common challenge on 'terror'

Chinese President Xi Jinping and his Indian host Prime Minister Narendra Modi pledged at an informal summit to cooperate against "radicalisation", India said late Friday, after the Asian giants with historically prickly ties had exchanged sharp words over Kashmir. The seaside meeting, aimed at mending relations, came after India irked China by its August move to split Jammu and Kashmir in two.

'Our lives are a ping-pong game': Hundreds in Chicago demonstrate amid landmark immigration bill

Hundreds of demonstrators gathered in downtown Chicago to voice concerns over an immigration bill, the Fairness for High-Skilled Immigrants Act.

Xi
Xi's Seaside Summit With Modi Aims to Reset China-India Ties
  • World
  • 2019-10-11 10:06:52Z

(Bloomberg) -- Ancient temples carved into massive rock faces along the ocean will form the backdrop to Chinese President Xi Jinping and Indian Prime Minister Narendra Modi's informal talks aimed at resetting ties strained by border disputes and trade tensions.The leaders of the world's two most populous countries are meeting Friday and Saturday in the southern Indian coastal town of Mamallapuram, on the outskirts of Chennai. This is the second straight "informal" meeting between the leaders, after their interaction in Wuhan in April last year. There's no set agenda, India's foreign ministry said in a statement.The summit comes as China navigates a trade war with the U.S. and months-long...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.