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Indian Bank's (NSE:INDIANB) Shareholders Will Receive A Bigger Dividend Than Last Year

Simply Wall St · 05/28 00:16

Indian Bank's (NSE:INDIANB) dividend will be increasing from last year's payment of the same period to ₹16.25 on 17th of July. This makes the dividend yield 2.7%, which is above the industry average.

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Indian Bank's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Indian Bank has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Indian Bank's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 15.2%. The future payout ratio could be 20% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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NSEI:INDIANB Historic Dividend May 28th 2025

Check out our latest analysis for Indian Bank

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of ₹3.40 in 2015 to the most recent total annual payment of ₹16.25. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Indian Bank has seen EPS rising for the last five years, at 39% 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.

Indian Bank 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Indian Bank that investors need to be conscious of moving forward. Is Indian Bank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.