Caplin Point Laboratories (NSE:CAPLIPOINT) Will Pay A Larger Dividend Than Last Year At ₹1.50

The board of Caplin Point Laboratories Limited (NSE:CAPLIPOINT) has announced that it will be increasing its dividend on the 28th of October to ₹1.50. Although the dividend is now higher, the yield is only 0.4%, which is below the industry average.

See our latest analysis for Caplin Point Laboratories

Caplin Point Laboratories' Earnings Easily Cover the Distributions

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, Caplin Point Laboratories was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 21.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 8.0%, which is in the range that makes us comfortable with the sustainability of the dividend.

Caplin Point Laboratories Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2011, the first annual payment was ₹0.20, compared to the most recent full-year payment of ₹3.00. This works out to be a compound annual growth rate (CAGR) of approximately 31% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Caplin Point Laboratories has impressed us by growing EPS at 33% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Caplin Point Laboratories 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. 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.

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. As an example, we've identified 1 warning sign for Caplin Point Laboratories that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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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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