Yahoo Finance Don't Buy Power Corporation of Canada (TSE:POW) For Its Next Dividend Without Doing These Checks
Readers hoping to buy Power Corporation of Canada (TSE:POW) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 30th of March in order to be eligible for this dividend, which will be paid on the 30th of April.
Power Corporation of Canada's upcoming dividend is CA$0.45 a share, following on from the last 12 months, when the company distributed a total of CA$1.79 per share to shareholders. Last year's total dividend payments show that Power Corporation of Canada has a trailing yield of 5.4% on the current share price of CA$32.95. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Power Corporation of Canada has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Power Corporation of Canada
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Power Corporation of Canada paid out 57% of its earnings to investors last year, a normal payout level for most businesses.
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?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Power Corporation of Canada's earnings are down 4.4% a year over the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Power Corporation of Canada has lifted its dividend by approximately 4.4% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.
To Sum It Up
Is Power Corporation of Canada an attractive dividend stock, or better left on the shelf? We're not overly enthused to see Power Corporation of Canada's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Although, if you're still interested in Power Corporation of Canada and want to know more, you'll find it very useful to know what risks this stock faces. Every company has risks, and we've spotted 1 warning sign for Power Corporation of Canada you should know about.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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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