Zydus Wellness (NSE:ZYDUSWELL) Has Announced A Dividend Of ₹5.00

The board of Zydus Wellness Limited (NSE:ZYDUSWELL) has announced that it will pay a dividend of ₹5.00 per share on the 28th of August. Including this payment, the dividend yield on the stock will be 0.3%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Zydus Wellness

Zydus Wellness' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Zydus Wellness' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 21.7%. If the dividend continues on this path, the payout ratio could be 8.5% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The last annual payment of ₹5.00 was flat on the first annual payment 10 years ago. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Zydus Wellness has impressed us by growing EPS at 12% per year over the past five years. Zydus Wellness definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Zydus Wellness' Dividend

Overall, we like to see the dividend staying consistent, and we think Zydus Wellness might even raise payments in the future. 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Zydus Wellness for free with public analyst estimates for the company. Is Zydus Wellness not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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