Themis Medicare's (NSE:THEMISMED) Upcoming Dividend Will Be Larger Than Last Year's

Themis Medicare Limited (NSE:THEMISMED) has announced that it will be increasing its dividend on the 19th of October to ₹5.00. This takes the annual payment to 0.6% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for Themis Medicare

Themis Medicare's Earnings Easily Cover the Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Themis Medicare's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 35.0% over the next 12 months. If the dividend continues on this path, the payout ratio could be 4.7% by next year, which we think can be pretty sustainable going forward.

Themis Medicare Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2020, the first annual payment was ₹1.75, compared to the most recent full-year payment of ₹5.00. This means that it has been growing its distributions at 69% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see Themis Medicare has been growing its earnings per share at 35% a 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.

Themis Medicare 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.

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. For example, we've picked out 3 warning signs for Themis Medicare that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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