The board of Bliss GVS Pharma Limited (NSE:BLISSGVS) has announced that it will pay a dividend of ₹0.50 per share on the 21st of October. Including this payment, the dividend yield on the stock will be 0.5%, which is a modest boost for shareholders’ returns.
Bliss GVS Pharma’s Earnings Easily Cover the Distributions
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Bliss GVS Pharma’s dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
EPS is set to fall by 1.8% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could be 6.8%, which we are pretty comfortable with and we think is feasible on an earnings basis.
The company’s dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2011, the dividend has gone from ₹0.60 to ₹0.50. This works out to be a decline of approximately 1.8% per year over that time. Generally, we don’t like to see a dividend that has been declining over time as this can degrade shareholders’ returns and indicate that the company may be running into problems.
The Dividend’s Growth Prospects Are Limited
With a relatively unstable dividend, it’s even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Unfortunately, Bliss GVS Pharma’s earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
Our Thoughts On Bliss GVS Pharma’s Dividend
Overall, we don’t think this company makes a great dividend stock, even though the dividend wasn’t cut this year. The payments haven’t been particularly stable and we don’t see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we’ve identified 1 warning sign for Bliss GVS Pharma that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
If you’re looking to trade Bliss GVS Pharma, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.