Themis Medicare (NSE:THEMISMED) Has Affirmed Its Dividend Of ₹5.00

Themis Medicare Limited (NSE:THEMISMED) will pay a dividend of ₹5.00 on the 9th of October. This means the annual payment will be 0.3% of the current stock price, which is lower than the industry average.

View our latest analysis for Themis Medicare

Themis Medicare's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Prior to this announcement, Themis Medicare's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

If the trend of the last few years continues, EPS will grow by 41.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 5.6% by next year, which we think can be pretty sustainable going forward.

Themis Medicare Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 3 years was ₹1.75 in 2020, and the most recent fiscal year payment was ₹5.00. This means that it has been growing its distributions at 42% per annum over that time. Themis Medicare has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Themis Medicare has impressed us by growing EPS at 42% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Themis Medicare 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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