Radico Khaitan (NSE:RADICO) Is Paying Out A Larger Dividend Than Last Year

Radico Khaitan Limited (NSE:RADICO) will increase its dividend from last year's comparable payment on the 7th of September to ₹4.00. This takes the annual payment to 0.1% of the current stock price, which unfortunately is below what the industry is paying.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Radico Khaitan's Projected Earnings Seem Likely To Cover Future Distributions

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

Over the next year, EPS is forecast to expand by 139.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 7.6%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Radico Khaitan

Radico Khaitan Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ₹0.80, compared to the most recent full-year payment of ₹4.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Has Growth Potential

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 Radico Khaitan has been growing its earnings per share at 8.5% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Radico Khaitan's prospects of growing its dividend payments in the future.

Radico Khaitan Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 10 Radico Khaitan analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.