Fine Organic Industries' (NSE:FINEORG) Dividend Will Be ₹9.00

Fine Organic Industries Limited (NSE:FINEORG) will pay a dividend of ₹9.00 on the 23rd of September. Including this payment, the dividend yield on the stock will be 0.2%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Fine Organic Industries

Fine Organic Industries' Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Fine Organic Industries' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 28.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 6.3%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Fine Organic Industries' Dividend Has Lacked Consistency

It's comforting to see that Fine Organic Industries has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 5 years was ₹7.00 in 2018, and the most recent fiscal year payment was ₹9.00. This implies that the company grew its distributions at a yearly rate of about 5.2% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Fine Organic Industries might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Fine Organic Industries has impressed us by growing EPS at 45% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Fine Organic Industries' 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. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Fine Organic Industries that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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