Saksoft (NSE:SAKSOFT) Is Increasing Its Dividend To ₹3.00

Saksoft Limited (NSE:SAKSOFT) has announced that it will be increasing its dividend from last year's comparable payment on the 8th of September to ₹3.00. Although the dividend is now higher, the yield is only 0.6%, which is below the industry average.

Check out our latest analysis for Saksoft

Saksoft's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Saksoft'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 31.0% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 7.5%, which is in the range that makes us comfortable with the sustainability of the dividend.

Saksoft Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ₹1.00 in 2012, 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. Saksoft has seen EPS rising for the last five years, at 31% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Saksoft's Dividend

Overall, a dividend increase is always good, and we think that Saksoft is a strong income stock thanks to its track record and growing earnings. 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. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Saksoft management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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