ICRA (NSE:ICRA) Is Increasing Its Dividend To ₹28.00

ICRA Limited's (NSE:ICRA) dividend will be increasing on the 19th of August to ₹28.00, with investors receiving 3.7% more than last year. Although the dividend is now higher, the yield is only 0.7%, which is below the industry average.

Check out our latest analysis for ICRA

ICRA's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, ICRA's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 29.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.

ICRA Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was ₹17.00 in 2012, and the most recent fiscal year payment was ₹27.00. This implies that the company grew its distributions at a yearly rate of about 4.7% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

We Could See ICRA's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see ICRA has been growing its earnings per share at 7.6% a year over the past five years. ICRA definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

ICRA Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that ICRA is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in ICRA in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.