Radico Khaitan (NSE:RADICO) Will Pay A Larger Dividend Than Last Year At ₹4.00

Radico Khaitan Limited (NSE:RADICO) has announced that it will be increasing its dividend from last year's comparable payment on the 7th of September to ₹4.00. This takes the annual payment to 0.2% of the current stock price, which unfortunately is below what the industry is paying.

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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 what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 123.3%. If the dividend continues on this path, the payout ratio could be 8.1% by next year, which we think can be pretty sustainable going forward.

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 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.

Radico Khaitan 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. Radico Khaitan has seen EPS rising for the last five years, at 8.5% per annum. 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.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we track are forecasting for Radico Khaitan for free with public 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.

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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.