The board of India Pesticides Limited (NSE:IPL) has announced that it will pay a dividend on the 19th of September, with investors receiving ₹0.75 per share. This payment means the dividend yield will be 0.4%, which is below the average for the industry.
Check out our latest analysis for India Pesticides
India Pesticides' Dividend Is Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive. However, India Pesticides' 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 43.1% over the next year. If the dividend continues on this path, the payout ratio could be 1.8% by next year, which we think can be pretty sustainable going forward.
India Pesticides Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. There hasn't been much of a change in the dividend over the last 2 years. India Pesticides hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.
We Could See India Pesticides' Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. India Pesticides has seen EPS rising for the last five years, at 7.2% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
Our Thoughts On India Pesticides' Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 2 warning signs for India Pesticides that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
About NSEI:IPL
Flawless balance sheet second-rate dividend payer.
