Deepak Fertilisers And Petrochemicals (NSE:DEEPAKFERT) Is Increasing Its Dividend To ₹10.00

The board of Deepak Fertilisers And Petrochemicals Corporation Limited (NSE:DEEPAKFERT) has announced that it will be paying its dividend of ₹10.00 on the 1st of January, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 0.6%, which is fairly typical for the industry.

We've discovered 2 warning signs about Deepak Fertilisers And Petrochemicals. View them for free.

Deepak Fertilisers And Petrochemicals' Projected Earnings Seem Likely To Cover Future Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Deepak Fertilisers And Petrochemicals' 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 is forecast to expand by 50.9%. If the dividend continues on this path, the payout ratio could be 11% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Deepak Fertilisers And Petrochemicals

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from ₹4.00 total annually to ₹8.50. This works out to be a compound annual growth rate (CAGR) of approximately 7.8% 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Deepak Fertilisers And Petrochemicals has grown earnings per share at 50% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Deepak Fertilisers And Petrochemicals' Dividend

Overall, a dividend increase is always good, and we think that Deepak Fertilisers And Petrochemicals 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Deepak Fertilisers And Petrochemicals that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.