Abbott India (NSE:ABBOTINDIA) Has Announced That It Will Be Increasing Its Dividend To ₹410.00

The board of Abbott India Limited (NSE:ABBOTINDIA) has announced that it will be paying its dividend of ₹410.00 on the 7th of September, an increased payment from last year's comparable dividend. This takes the dividend yield to 1.5%, which shareholders will be pleased with.

See our latest analysis for Abbott India

Abbott India's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Abbott India's dividend made up quite a large proportion of earnings but only 75% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 34.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 68%, which is in the range that makes us comfortable with the sustainability of the dividend.

Abbott India Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ₹18.00 in 2014, and the most recent fiscal year payment was ₹410.00. This implies that the company grew its distributions at a yearly rate of about 37% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Abbott India has seen EPS rising for the last five years, at 22% per annum. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.

Abbott India Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Abbott India analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Abbott India not quite the opportunity you were looking for? Why not check out our selection of top 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.

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