Navin Fluorine International (NSE:NAVINFLUOR) Could Be A Buy For Its Upcoming Dividend
Navin Fluorine International Limited (NSE:NAVINFLUOR) is about to trade ex-dividend in the next day or so. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Navin Fluorine International investors that purchase the stock on or after the 5th of November will not receive the dividend, which will be paid on the 29th of November.
The company's next dividend payment will be ₹8.00 per share. Last year, in total, the company distributed ₹15.10 to shareholders. Last year's total dividend payments show that Navin Fluorine International has a trailing yield of 0.2% on the current share price of ₹8406.00. If you buy this business for its dividend, you should have an idea of whether Navin Fluorine International's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Navin Fluorine International has a low and conservative payout ratio of just 9.3% of its income after tax. A useful secondary check can be to evaluate whether Navin Fluorine International generated enough free cash flow to afford its dividend. The good news is it paid out just 14% of its free cash flow in the last year.
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.
View our latest analysis for Navin Fluorine International
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Navin Fluorine International has grown its earnings rapidly, up 28% a year for the past five years. Navin Fluorine International earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Navin Fluorine International has increased its dividend at approximately 13% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Should investors buy Navin Fluorine International for the upcoming dividend? Navin Fluorine International has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.
Curious what other investors think of Navin Fluorine International? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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