Vita Life Sciences (ASX:VLS) Is Due To Pay A Dividend Of A$0.045

Vita Life Sciences Limited (ASX:VLS) has announced that it will pay a dividend of A$0.045 per share on the 3rd of October. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.

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Vita Life Sciences' Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Vita Life Sciences' dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 11.9% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 66% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Vita Life Sciences

Vita Life Sciences Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was A$0.035, compared to the most recent full-year payment of A$0.10. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Vita Life Sciences has seen EPS rising for the last five years, at 12% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Vita Life Sciences' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Vita Life Sciences that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.