Vedant Fashions' (NSE:MANYAVAR) Dividend Will Be Increased To ₹9.00

Vedant Fashions Limited (NSE:MANYAVAR) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of September to ₹9.00. This takes the dividend yield to 0.7%, which shareholders will be pleased with.

Check out our latest analysis for Vedant Fashions

Vedant Fashions' Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Vedant Fashions was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 57.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

Vedant Fashions Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. 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. Vedant Fashions has seen EPS rising for the last five years, at 23% per annum. Vedant Fashions is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Vedant Fashions Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Vedant Fashions is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Taking the debate a bit further, we've identified 1 warning sign for Vedant Fashions that investors need to be conscious of moving forward. 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.