Mrs. Bectors Food Specialities (NSE:BECTORFOOD) Will Pay A Larger Dividend Than Last Year At ₹2.00

Mrs. Bectors Food Specialities Limited (NSE:BECTORFOOD) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of September to ₹2.00. Although the dividend is now higher, the yield is only 0.2%, which is below the industry average.

View our latest analysis for Mrs. Bectors Food Specialities

Mrs. Bectors Food Specialities' Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Mrs. Bectors Food Specialities is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Looking forward, earnings per share is forecast to rise by 59.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 10%, which is in the range that makes us comfortable with the sustainability of the dividend.

Mrs. Bectors Food Specialities' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 3 years was ₹2.40 in 2021, and the most recent fiscal year payment was ₹3.25. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Mrs. Bectors Food Specialities has grown earnings per share at 33% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Our Thoughts On Mrs. Bectors Food Specialities' Dividend

Overall, we always like to see the dividend being raised, but we don't think Mrs. Bectors Food Specialities will make a great income stock. While Mrs. Bectors Food Specialities is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 7 analysts we track are forecasting for Mrs. Bectors Food Specialities for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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