Stove Kraft's (NSE:STOVEKRAFT) Upcoming Dividend Will Be Larger Than Last Year's

Stove Kraft Limited (NSE:STOVEKRAFT) will increase its dividend from last year's comparable payment on the 26th of October to ₹3.00. The payment will take the dividend yield to 0.4%, which is in line with the average for the industry.

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Stove Kraft's Payment Could Potentially Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Stove Kraft was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 81.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 13%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Stove Kraft

Stove Kraft Is Still Building Its Track Record

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

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Stove Kraft has grown earnings per share at 15% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Stove Kraft Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Stove Kraft 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.

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. As an example, we've identified 1 warning sign for Stove Kraft that you should be aware of before investing. Is Stove Kraft not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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