E.I.D.- Parry (India) (NSE:EIDPARRY) Has Announced A Dividend Of ₹5.50

E.I.D.- Parry (India) Limited (NSE:EIDPARRY) will pay a dividend of ₹5.50 on the 11th of December. This makes the dividend yield 1.7%, which will augment investor returns quite nicely.

View our latest analysis for E.I.D.- Parry (India)

E.I.D.- Parry (India)'s Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, E.I.D.- Parry (India)'s dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 21.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 22% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ₹4.00 in 2012 to the most recent total annual payment of ₹11.00. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. E.I.D.- Parry (India) has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

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. E.I.D.- Parry (India) 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.

E.I.D.- Parry (India) Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think E.I.D.- Parry (India) might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for E.I.D.- Parry (India) that investors should know about before committing capital to this stock. Is E.I.D.- Parry (India) 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.