Equitas Small Finance Bank (NSE:EQUITASBNK) Is Due To Pay A Dividend Of ₹1.00

The board of Equitas Small Finance Bank Limited (NSE:EQUITASBNK) has announced that it will pay a dividend on the 10th of October, with investors receiving ₹1.00 per share. This payment means that the dividend yield will be 1.2%, which is around the industry average.

Check out our latest analysis for Equitas Small Finance Bank

Equitas Small Finance Bank's Dividend Forecasted To Be Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Looking at its history, Equitas Small Finance Bank does not yet have a history of paying out dividends, with this year being its first year of distribution. While this gives us less confidence in Equitas Small Finance Bank's long-term dividend potential, the company's payout ratio of 14%is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Over the next 3 years, EPS is forecast to expand by 103.6%. Analysts estimate the future payout ratio will be 14% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Equitas Small Finance Bank Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Equitas Small Finance Bank has grown earnings per share at 20% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like Equitas Small Finance Bank's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For instance, we've picked out 1 warning sign for Equitas Small Finance Bank that investors should take into consideration. Is Equitas Small Finance Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.

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