Likhitha Infrastructure (NSE:LIKHITHA) Will Pay A Larger Dividend Than Last Year At ₹1.50

The board of Likhitha Infrastructure Limited (NSE:LIKHITHA) has announced that it will be paying its dividend of ₹1.50 on the 27th of October, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 0.5%, which is fairly typical for the industry.

View our latest analysis for Likhitha Infrastructure

Likhitha Infrastructure's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Likhitha Infrastructure's earnings easily 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 45.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 6.5%, which is in the range that makes us comfortable with the sustainability of the dividend.

Likhitha Infrastructure Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the annual payment back then was ₹0.75, compared to the most recent full-year payment of ₹1.50. This works out to be a compound annual growth rate (CAGR) of approximately 41% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Likhitha Infrastructure has been growing its earnings per share at 45% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Likhitha Infrastructure's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Likhitha Infrastructure that investors should know about before committing capital to this stock. 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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