Supreme Industries Limited (NSE: SUPREMEIND) will increase its dividend on November 21 to 6.00. This brings the dividend yield from 1.0% to 1.0%, which shareholders will be delighted with.
Check out our latest review for Supreme Industries
Supreme Industries revenues easily cover distributions
A high dividend yield for a few years doesn’t mean much if it can’t be sustained. But before making the announcement, Supreme Industries earnings were fairly easy to cover the dividend. However, with more than 75% of free cash flow paid to shareholders, future growth could potentially be limited.
Going forward, earnings per share are expected to fall 19.0% over the next year. If the dividend continues according to recent trends, we estimate that the payout ratio could be 35%, which we consider comfortable enough with most of the company’s profits remaining to grow the business in the future.
Supreme Industries has a strong balance sheet
The company has a long history of paying stable dividends. The dividend went from 4.30 in 2011 to the last annual payment of 23.00. This means that he increased his distributions by 18% per year during this period. Rapidly growing dividends over a long period of time are a very valuable feature for an income stock.
The dividend seems likely to increase
Investors in the company will be happy to receive dividends for some time. Supreme Industries has impressed us by increasing EPS by 22% per year over the past five years. Rapid earnings growth and a low payout ratio suggest that this company has indeed reinvested in its business. If this were to continue, this business could have a bright future.
Our thoughts on the Supreme Industries dividend
In summary, it’s great to see that the company can increase the dividend and keep it within a sustainable range. On the positive side, the dividend looks sustainable by most measures, but it is held back by the lack of cash flow. The payout isn’t exceptional, but it could be a decent addition to a dividend portfolio.
Market movements testify to the high value of a coherent dividend policy compared to a more unpredictable one. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. For example, we have selected 1 warning sign for Supreme Industries that investors should be aware of before committing capital to this stock. We have also set up a list of global stocks with a solid dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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