Vidhi Specialty Food Ingredients (NSE:VIDHIING) Has Affirmed Its Dividend Of ₹0.40

Vidhi Specialty Food Ingredients Limited (NSE:VIDHIING) has announced that it will pay a dividend of ₹0.40 per share on the 8th of December. This means the annual payment will be 0.2% of the current stock price, which is lower than the industry average.

View our latest analysis for Vidhi Specialty Food Ingredients

Vidhi Specialty Food Ingredients' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, Vidhi Specialty Food Ingredients' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 8.0% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 12% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ₹0.20 in 2013, and the most recent fiscal year payment was ₹0.80. This means that it has been growing its distributions at 15% per annum over that time. Vidhi Specialty Food Ingredients 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 Has Growth Potential

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. It's encouraging to see that Vidhi Specialty Food Ingredients has been growing its earnings per share at 8.0% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Vidhi Specialty Food Ingredients' Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.

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. Are management backing themselves to deliver performance? Check their shareholdings in Vidhi Specialty Food Ingredients in our latest insider ownership analysis. 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.