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Sun Life Financial's (TSE:SLF) Upcoming Dividend Will Be Larger Than Last Year's

The board of Sun Life Financial Inc. (TSE:SLF) has announced that it will be paying its dividend of CA$0.75 on the 30th of June, an increased payment from last year's comparable dividend. This takes the annual payment to 4.4% of the current stock price, which is about average for the industry.

View our latest analysis for Sun Life Financial

Sun Life Financial's Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Sun Life Financial was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

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Over the next year, EPS is forecast to expand by 1.8%. If the dividend continues on this path, the payout ratio could be 56% by next year, which we think can be pretty sustainable going forward.

historic-dividend
historic-dividend

Sun Life Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the dividend has gone from CA$1.44 total annually to CA$2.88. This implies that the company grew its distributions at a yearly rate of about 7.2% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Sun Life Financial's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Sun Life Financial has been growing its earnings per share at 8.1% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Sun Life Financial's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 7 analysts we track are forecasting for Sun Life Financial for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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