Lincoln Pharmaceuticals (NSE:LINCOLN) Is Due To Pay A Dividend Of ₹1.50

Lincoln Pharmaceuticals Limited (NSE:LINCOLN) will pay a dividend of ₹1.50 on the 30th of October. Including this payment, the dividend yield on the stock will be 0.5%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Lincoln Pharmaceuticals

Lincoln Pharmaceuticals' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Lincoln Pharmaceuticals' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 24.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 3.8% by next year, which we think can be pretty sustainable going forward.

Lincoln Pharmaceuticals Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the dividend has gone from ₹0.60 total annually to ₹1.50. This means that it has been growing its distributions at 9.6% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

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. It's encouraging to see that Lincoln Pharmaceuticals has been growing its earnings per share at 25% a 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.

We Really Like Lincoln Pharmaceuticals' Dividend

Overall, we like to see the dividend staying consistent, and we think Lincoln Pharmaceuticals might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. 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 1 warning sign for Lincoln Pharmaceuticals 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.