Lambodhara Textiles (NSE:LAMBODHARA) Has Announced A Dividend Of ₹0.50

The board of Lambodhara Textiles Limited (NSE:LAMBODHARA) has announced that it will pay a dividend of ₹0.50 per share on the 22nd of October. This means that the annual payment will be 0.4% of the current stock price, which is in line with the average for the industry.

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Lambodhara Textiles' Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Lambodhara Textiles was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 6.7% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 6.7% by next year, which is in a pretty sustainable range.

See our latest analysis for Lambodhara Textiles

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from ₹0.75 total annually to ₹0.50. Doing the maths, this is a decline of about 4.0% per year. A company that decreases its dividend over time generally isn't what we are looking for.

Lambodhara Textiles Could Grow Its Dividend

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. Lambodhara Textiles has seen EPS rising for the last five years, at 6.7% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Lambodhara Textiles' prospects of growing its dividend payments in the future.

Our Thoughts On Lambodhara Textiles' Dividend

Overall, we think Lambodhara Textiles is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for Lambodhara Textiles (1 is a bit concerning!) that you should be aware of before investing. Is Lambodhara Textiles 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.