AGI Greenpac's (NSE:AGI) Upcoming Dividend Will Be Larger Than Last Year's

AGI Greenpac Limited (NSE:AGI) will increase its dividend from last year's comparable payment on the 19th of October to ₹7.00. Based on this payment, the dividend yield for the company will be 0.8%, which is fairly typical for the industry.

Our free stock report includes 1 warning sign investors should be aware of before investing in AGI Greenpac. Read for free now.

AGI Greenpac's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, AGI Greenpac's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 49.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 10.0%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for AGI Greenpac

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ₹3.00 in 2015, and the most recent fiscal year payment was ₹7.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.8% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. AGI Greenpac has impressed us by growing EPS at 49% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like AGI Greenpac's Dividend

Overall, a dividend increase is always good, and we think that AGI Greenpac is a strong income stock thanks to its track record and growing earnings. 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 of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 1 warning sign for AGI Greenpac that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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