Is Ambuja Cements Limited (NSE:AMBUJACEM) An Attractive Dividend Stock?

Armando Maloney
Updated

Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Ambuja Cements Limited (NSEI:AMBUJACEM) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Should it have a place in your portfolio? Let’s take a look at Ambuja Cements in more detail. See our latest analysis for Ambuja Cements

5 questions to ask before buying a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • Is their annual yield among the top 25% of dividend payers?

  • Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

  • Has dividend per share risen in the past couple of years?

  • Does earnings amply cover its dividend payments?

  • Will it have the ability to keep paying its dividends going forward?

NSEI:AMBUJACEM Historical Dividend Yield May 21st 18
NSEI:AMBUJACEM Historical Dividend Yield May 21st 18

How does Ambuja Cements fare?

The current trailing twelve-month payout ratio for the stock is 44.28%, which means that the dividend is covered by earnings. Going forward, analysts expect AMBUJACEM’s payout to remain around the same level at 46.40% of its earnings, which leads to a dividend yield of around 2.29%. Furthermore, EPS is forecasted to fall to ₹8.07 in the upcoming year. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although AMBUJACEM’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, Ambuja Cements produces a yield of 1.70%, which is high for Basic Materials stocks but still below the market’s top dividend payers.

Next Steps:

Taking into account the dividend metrics, Ambuja Cements ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important factors you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for AMBUJACEM’s future growth? Take a look at our free research report of analyst consensus for AMBUJACEM’s outlook.

  2. Valuation: What is AMBUJACEM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AMBUJACEM is currently mispriced by the market.

  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.