Stock Analysis

Canara Bank (NSE:CANBK) Is Paying Out A Larger Dividend Than Last Year

Published
NSEI:CANBK
Source: Shutterstock

Canara Bank (NSE:CANBK) will increase its dividend from last year's comparable payment on the 28th of July to ₹12.00. This makes the dividend yield 3.8%, which is above the industry average.

View our latest analysis for Canara Bank

Canara Bank's Payment Expected To Have Solid Earnings Coverage

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

Having distributed dividends for at least 10 years, Canara Bank has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Canara Bank's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

Looking forward, EPS is forecast to rise by 27.3% over the next 3 years. The future payout ratio could be 19% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

historic-dividend
NSEI:CANBK Historic Dividend June 3rd 2023

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was ₹13.00, compared to the most recent full-year payment of ₹12.00. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Canara Bank has grown earnings per share at 65% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Canara Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Canara Bank 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Canara Bank that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Valuation is complex, but we're helping make it simple.

Find out whether Canara Bank is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.