Nesco's (NSE:NESCO) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Nesco Limited (NSE:NESCO) has announced that it will be paying its dividend of ₹6.00 on the 20th of August, an increased payment from last year's comparable dividend. This makes the dividend yield 0.7%, which is above the industry average.

See our latest analysis for Nesco

Nesco's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Nesco 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 16.9%. If the dividend continues on this path, the payout ratio could be 11% by next year, which we think can be pretty sustainable going forward.

Nesco Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ₹1.00 in 2014, and the most recent fiscal year payment was ₹6.00. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Nesco has been growing its earnings per share at 15% a year over the past five years. Nesco definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Nesco 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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Nesco stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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