GIC Housing Finance (NSE:GICHSGFIN) Is Paying Out A Dividend Of ₹4.50

GIC Housing Finance Limited (NSE:GICHSGFIN) has announced that it will pay a dividend of ₹4.50 per share on the 26th of October. The dividend yield will be 2.5% based on this payment which is still above the industry average.

View our latest analysis for GIC Housing Finance

GIC Housing Finance's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, GIC Housing Finance's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 1.9% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 11% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ₹5.00 in 2013, and the most recent fiscal year payment was ₹4.50. This works out to be a decline of approximately 1.0% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

GIC Housing Finance May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. GIC Housing Finance hasn't seen much change in its earnings per share over the last five years. If GIC Housing Finance is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On GIC Housing Finance's Dividend

Overall, a consistent dividend is a good thing, and we think that GIC Housing Finance has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, GIC Housing Finance has 2 warning signs (and 1 which is a bit concerning) we think you should know about. 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.