Agro Tech Foods (NSE:ATFL) Has Announced A Dividend Of ₹3.00

The board of Agro Tech Foods Limited (NSE:ATFL) has announced that it will pay a dividend of ₹3.00 per share on the 17th of September. This payment means the dividend yield will be 0.3%, which is below the average for the industry.

Check out our latest analysis for Agro Tech Foods

Agro Tech Foods' Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, Agro Tech Foods' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 3.1% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.

Agro Tech Foods Has A Solid Track Record

The company has an extended history of paying stable dividends. The first annual payment during the last 10 years was ₹1.75 in 2011, and the most recent fiscal year payment was ₹3.00. This implies that the company grew its distributions at a yearly rate of about 5.5% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Agro Tech Foods has only grown its earnings per share at 3.1% per annum over the past five years. While growth may be thin on the ground, Agro Tech Foods could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Agro Tech Foods' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Agro Tech Foods that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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