Yahoo Finance Should Income Investors Look At Power Corporation of Canada (TSE:POW) Before Its Ex-Dividend?
It looks like Power Corporation of Canada (TSE:POW) is about to go ex-dividend in the next four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Power Corporation of Canada's shares on or after the 30th of March will not receive the dividend, which will be paid on the 1st of May.
The company's upcoming dividend is CA$0.53 a share, following on from the last 12 months, when the company distributed a total of CA$1.98 per share to shareholders. Calculating the last year's worth of payments shows that Power Corporation of Canada has a trailing yield of 5.7% on the current share price of CA$34.64. If you buy this business for its dividend, you should have an idea of whether Power Corporation of Canada's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Power Corporation of Canada
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Power Corporation of Canada paid out more than half (69%) of its earnings last year, which is a regular payout ratio for most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Power Corporation of Canada's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Power Corporation of Canada has delivered an average of 5.5% per year annual increase in its dividend, based on the past 10 years of dividend payments.
Final Takeaway
Is Power Corporation of Canada worth buying for its dividend? Power Corporation of Canada's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. It doesn't appear an outstanding opportunity, but could be worth a closer look.
Curious what other investors think of Power Corporation of Canada? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.
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