Bayer CropScience (NSE:BAYERCROP) Has Announced A Dividend Of ₹25.00

Bayer CropScience Limited (NSE:BAYERCROP) has announced that it will pay a dividend of ₹25.00 per share on the 21st of September. The dividend yield is 0.5% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Bayer CropScience

Bayer CropScience Doesn't Earn Enough To Cover Its Payments

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, Bayer CropScience's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Earnings per share could rise by 11.8% over the next year if things go the same way as they have for the last few years. Assuming the dividend continues along recent trends, we think the payout ratio could reach 108%, which probably can't continue without starting to put some pressure on the balance sheet.

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. Since 2012, the annual payment back then was ₹4.20, compared to the most recent full-year payment of ₹25.00. This works out to be a compound annual growth rate (CAGR) of approximately 20% 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. Bayer CropScience has seen EPS rising for the last five years, at 12% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Bayer CropScience's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Bayer CropScience (1 doesn't sit too well with us!) that you should be aware of before investing. Is Bayer CropScience not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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