Filatex India (NSE:FILATEX) Is Increasing Its Dividend To ₹0.25

Filatex India Limited's (NSE:FILATEX) dividend will be increasing from last year's payment of the same period to ₹0.25 on 26th of October. This makes the dividend yield about the same as the industry average at 0.5%.

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Filatex India's Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, Filatex India's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share could rise by 21.8% 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 7.0% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Filatex India

Filatex India's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The annual payment during the last 4 years was ₹0.20 in 2021, and the most recent fiscal year payment was ₹0.25. This works out to be a compound annual growth rate (CAGR) of approximately 5.7% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Filatex India has seen EPS rising for the last five years, at 22% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Filatex India Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Filatex India is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Filatex India has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Is Filatex India 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.