CRISIL's (NSE:CRISIL) Dividend Will Be Increased To ₹22.00

The board of CRISIL Limited (NSE:CRISIL) has announced that it will be increasing its dividend on the 28th of April to ₹22.00. The announced payment will take the dividend yield to 1.7%, which is in line with the average for the industry.

View our latest analysis for CRISIL

CRISIL's Earnings Easily Cover the Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. The last dividend was quite easily covered by CRISIL's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to fall by 1.6%. If recent patterns in the dividend continue, we could see the payout ratio reaching 80% in the next 12 months, which is on the higher end of the range we would say is sustainable.

CRISIL Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was ₹11.00 in 2012, and the most recent fiscal year payment was ₹39.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

CRISIL Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. CRISIL has impressed us by growing EPS at 9.1% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like CRISIL's Dividend

Overall, a dividend increase is always good, and we think that CRISIL is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 CRISIL analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is CRISIL not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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