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Coral India Finance and Housing Limited (NSE:CORALFINAC) stock is about to trade ex-dividend in 3 days time. This means that investors who purchase shares on or after the 22nd of August will not receive the dividend, which will be paid on the 27th of September.
Coral India Finance and Housing's next dividend payment will be ₹0.20 per share, on the back of last year when the company paid a total of ₹0.20 to shareholders. Last year's total dividend payments show that Coral India Finance and Housing has a trailing yield of 1.6% on the current share price of ₹12.55. If you buy this business for its dividend, you should have an idea of whether Coral India Finance and Housing's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Coral India Finance and Housing
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Coral India Finance and Housing is paying out just 10% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit Coral India Finance and Housing paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Coral India Finance and Housing earnings per share are up 7.8% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Coral India Finance and Housing's dividend payments are broadly unchanged compared to where they were five years ago.