Can Fin Homes (NSE:CANFINHOME) Will Pay A Smaller Dividend Than Last Year

Can Fin Homes Limited's (NSE:CANFINHOME) dividend is being reduced from last year's payment covering the same period to ₹1.50 on the 7th of October. This means that the annual payment is 0.5% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for Can Fin Homes

Can Fin Homes' Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Can Fin Homes has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 7.6% also shows that Can Fin Homes is able to comfortably pay dividends.

Over the next year, EPS could expand by 15.3% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 6.9% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2012, the dividend has gone from ₹0.50 total annually to ₹3.00. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Can Fin Homes has impressed us by growing EPS at 15% per year over the past five years. Can Fin Homes definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Can Fin Homes Looks Like A Great Dividend Stock

Overall, we think that Can Fin Homes could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Can Fin Homes that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.