Navin Fluorine International (NSE:NAVINFLUOR) Is Paying Out A Dividend Of ₹7.00

Navin Fluorine International Limited's (NSE:NAVINFLUOR) investors are due to receive a payment of ₹7.00 per share on 31st of August. Including this payment, the dividend yield on the stock will be 0.4%, which is a modest boost for shareholders' returns.

See our latest analysis for Navin Fluorine International

Navin Fluorine International's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Navin Fluorine International was paying a whopping 340% as a dividend, but this only made up 18% of its overall earnings. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

Looking forward, earnings per share is forecast to rise by 114.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, which is in the range that makes us comfortable with the sustainability of the dividend.

Navin Fluorine International Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from ₹3.00 total annually to ₹12.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Navin Fluorine International has been growing its earnings per share at 13% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Navin Fluorine International's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Navin Fluorine International's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

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. For instance, we've picked out 1 warning sign for Navin Fluorine International that investors should take into consideration. Is Navin Fluorine International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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