Canara Robeco Asset Management (NSE:CRAMC) Could Be A Buy For Its Upcoming Dividend
Canara Robeco Asset Management Company Limited (NSE:CRAMC) stock is about to trade ex-dividend in 3 days. 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase Canara Robeco Asset Management's shares before the 16th of October in order to be eligible for the dividend, which will be paid on the 8th of November.
The company's next dividend payment will be ₹2.00 per share. Last year, in total, the company distributed ₹5.00 to shareholders. Last year's total dividend payments show that Canara Robeco Asset Management has a trailing yield of 2.3% on the current share price of ₹219.95. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Canara Robeco Asset Management can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Canara Robeco Asset Management's payout ratio is modest, at just 37% of profit.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
See our latest analysis for Canara Robeco Asset Management
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Canara Robeco Asset Management has grown its earnings rapidly, up 45% a year for the past five years.
Given that Canara Robeco Asset Management has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
Has Canara Robeco Asset Management got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Canara Robeco Asset Management looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Wondering what the future holds for Canara Robeco Asset Management? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.