Radico Khaitan (NSE:RADICO) Is Increasing Its Dividend To ₹4.00

The board of Radico Khaitan Limited (NSE:RADICO) has announced that it will be paying its dividend of ₹4.00 on the 7th of September, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 0.2%.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Radico Khaitan's Payment Could Potentially Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Radico Khaitan's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 122.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 8.1% by next year, which is in a pretty sustainable range.

See our latest analysis for Radico Khaitan

Radico Khaitan Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ₹0.80 in 2015, and the most recent fiscal year payment was ₹4.00. This means that it has been growing its distributions at 17% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Radico Khaitan's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Radico Khaitan has grown earnings per share at 8.5% per year over the past five years. Radico Khaitan definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Radico Khaitan's Dividend

Overall, a dividend increase is always good, and we think that Radico Khaitan 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. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 Radico Khaitan analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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