Advanced Enzyme Technologies (NSE:ADVENZYMES) Has Affirmed Its Dividend Of ₹1.00

The board of Advanced Enzyme Technologies Limited (NSE:ADVENZYMES) has announced that it will pay a dividend of ₹1.00 per share on the 11th of September. This makes the dividend yield 1.4%, which will augment investor returns quite nicely.

See our latest analysis for Advanced Enzyme Technologies

Advanced Enzyme Technologies' Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Advanced Enzyme Technologies was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 88.4% over the next year. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

Advanced Enzyme Technologies Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2017, the annual payment back then was ₹0.40, compared to the most recent full-year payment of ₹4.00. This works out to be a compound annual growth rate (CAGR) of approximately 47% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings have grown at around 3.2% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Advanced Enzyme Technologies has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Advanced Enzyme Technologies' Dividend

Overall, we think Advanced Enzyme Technologies is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. As an example, we've identified 1 warning sign for Advanced Enzyme Technologies that you should be aware of before investing. Is Advanced Enzyme Technologies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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