Rubfila International's (NSE:RUBFILA) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Rubfila International Limited (NSE:RUBFILA) has announced that it will be paying its dividend of ₹2.00 on the 24th of October, an increased payment from last year's comparable dividend. This takes the dividend yield to 2.3%, which shareholders will be pleased with.

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Rubfila International's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Rubfila International's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 8.8% over the next 12 months. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Rubfila International

Rubfila International Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The dividend has gone from an annual total of ₹1.20 in 2023 to the most recent total annual payment of ₹2.00. This means that it has been growing its distributions at 29% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Rubfila International Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Rubfila International has seen EPS rising for the last five years, at 8.8% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Rubfila International's Dividend

Overall, a dividend increase is always good, and we think that Rubfila International is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Rubfila International has 2 warning signs (and 1 which is significant) we think you should know about. 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.