Apollo Hospitals Enterprise (NSE:APOLLOHOSP) Is Increasing Its Dividend To ₹10.00

Apollo Hospitals Enterprise Limited's (NSE:APOLLOHOSP) dividend will be increasing from last year's payment of the same period to ₹10.00 on 1st of January. This makes the dividend yield about the same as the industry average at 0.2%.

Check out our latest analysis for Apollo Hospitals Enterprise

Apollo Hospitals Enterprise's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Apollo Hospitals Enterprise was easily earning enough to 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 199.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 9.6% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of ₹5.75 in 2014 to the most recent total annual payment of ₹16.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Apollo Hospitals Enterprise has grown earnings per share at 30% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Apollo Hospitals Enterprise's Dividend

Overall, a dividend increase is always good, and we think that Apollo Hospitals Enterprise 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. 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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 26 analysts we track are forecasting for Apollo Hospitals Enterprise for free with public analyst estimates for the company. Is Apollo Hospitals Enterprise not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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