Cupid (NSE:CUPID) Will Pay A Dividend Of ₹1.00

Cupid Limited (NSE:CUPID) has announced that it will pay a dividend of ₹1.00 per share on the 7th of December. This makes the dividend yield 2.0%, which will augment investor returns quite nicely.

View our latest analysis for Cupid

Cupid's Earnings Easily Cover the Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Cupid'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.

Over the next year, EPS could expand by 11.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.

Cupid's Dividend Has Lacked Consistency

Looking back, Cupid's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from ₹0.83 in 2015 to the most recent annual payment of ₹4.50. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. 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. Cupid has seen EPS rising for the last five years, at 12% per annum. Cupid definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Cupid Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Cupid might even raise payments in the future. 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. For example, we've picked out 2 warning signs for Cupid that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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.

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