Honeywell Automation India (NSE:HONAUT) Has Announced That It Will Be Increasing Its Dividend To ₹95.00

Honeywell Automation India Limited (NSE:HONAUT) will increase its dividend from last year's comparable payment on the 25th of August to ₹95.00. Despite this raise, the dividend yield of 0.2% is only a modest boost to shareholder returns.

Check out our latest analysis for Honeywell Automation India

Honeywell Automation India'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. However, Honeywell Automation India's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 73.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 14% by next year, which is in a pretty sustainable range.

Honeywell Automation India Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was ₹10.00, compared to the most recent full-year payment of ₹95.00. This means that it has been growing its distributions at 25% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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 Honeywell Automation India has been growing its earnings per share at 12% a year over the past five years. Honeywell Automation India definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Honeywell Automation India's Dividend

Overall, a dividend increase is always good, and we think that Honeywell Automation India 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for Honeywell Automation India for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.