Can Fin Homes (NSE:CANFINHOME) Has Re-Affirmed Its Dividend Of ₹2.00

Can Fin Homes Limited (NSE:CANFINHOME) has announced that it will pay a dividend of ₹2.00 per share on the 8th of October. This payment means the dividend yield will be 0.4%, which is below the average for the industry.

View our latest analysis for Can Fin Homes

Can Fin Homes' Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Can Fin Homes was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

If the trend of the last few years continues, EPS will grow by 23.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 5.0%, which is in the range that makes us comfortable with the sustainability of the dividend.

Can Fin Homes Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the first annual payment was ₹0.50, compared to the most recent full-year payment of ₹2.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Can Fin Homes has impressed us by growing EPS at 24% per year over the past five years. 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.

Our Thoughts On Can Fin Homes' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Can Fin Homes in our latest insider ownership analysis. We have also put together a list of global stocks with a solid dividend.

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