Godrej Agrovet Limited (NSE:GODREJAGRO) will pay a dividend of ₹9.50 on the 5th of August. This makes the dividend yield 2.0%, which will augment investor returns quite nicely.
See our latest analysis for Godrej Agrovet
Godrej Agrovet's Earnings Easily Cover The Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Godrej Agrovet was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Over the next year, EPS is forecast to expand by 149.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.
Godrej Agrovet Doesn't Have A Long Payment History
It is great to see that Godrej Agrovet has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 5 years was ₹4.50 in 2018, and the most recent fiscal year payment was ₹9.50. This means that it has been growing its distributions at 16% per annum 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.
Godrej Agrovet Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Godrej Agrovet has seen EPS rising for the last five years, at 5.5% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.
In Summary
Overall, a consistent dividend is a good thing, and we think that Godrej Agrovet has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
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. As an example, we've identified 4 warning signs for Godrej Agrovet that you should be aware of before investing. 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.
About NSEI:GODREJAGRO
Godrej Agrovet
An agri-business company, provides products and services that enhance crop and livestock yields in India and internationally.
Reasonable growth potential with proven track record and pays a dividend.
