Fine Organic Industries (NSE:FINEORG) Will Pay A Larger Dividend Than Last Year At ₹10.00

The board of Fine Organic Industries Limited (NSE:FINEORG) has announced that it will be paying its dividend of ₹10.00 on the 20th of September, an increased payment from last year's comparable dividend. This takes the annual payment to 0.2% of the current stock price, which unfortunately is below what the industry is paying.

View 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. Before making this announcement, Fine Organic Industries was easily earning enough to 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 39.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 5.6%, which is in the range that makes us comfortable with the sustainability of the dividend.

Fine Organic Industries' Dividend Has Lacked Consistency

Looking back, Fine Organic Industries' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of ₹7.00 in 2018 to the most recent total annual payment of ₹10.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.1% a year over that time. 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 25% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Fine Organic Industries 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. 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. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 7 analysts we track are forecasting for Fine Organic Industries for free with public analyst estimates for the company. Is Fine Organic Industries not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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