Deepak Nitrite's (NSE:DEEPAKNTR) Dividend Will Be Increased To ₹7.50

Deepak Nitrite Limited's (NSE:DEEPAKNTR) dividend will be increasing from last year's payment of the same period to ₹7.50 on 3rd of September. Even though the dividend went up, the yield is still quite low at only 0.4%.

See our latest analysis for Deepak Nitrite

Deepak Nitrite's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, Deepak Nitrite's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 81.9% over the next year. If the dividend continues on this path, the payout ratio could be 7.9% by next year, which we think can be pretty sustainable going forward.

Deepak Nitrite Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of ₹0.80 in 2013 to the most recent total annual payment of ₹7.50. This means that it has been growing its distributions at 25% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Deepak Nitrite has grown earnings per share at 60% 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.

Deepak Nitrite Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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 picked out 1 warning sign for Deepak Nitrite that investors should know about before committing capital to this stock. Is Deepak Nitrite not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.