Yahoo Finance Should You Buy CI Financial Corp. (TSE:CIX) For Its Upcoming Dividend?
Readers hoping to buy CI Financial Corp. (TSE:CIX) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, CI Financial investors that purchase the stock on or after the 28th of September will not receive the dividend, which will be paid on the 14th of October.
The company's next dividend payment will be CA$0.18 per share, on the back of last year when the company paid a total of CA$0.72 to shareholders. Based on the last year's worth of payments, CI Financial stock has a trailing yield of around 5.3% on the current share price of CA$13.46. If you buy this business for its dividend, you should have an idea of whether CI Financial's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for CI Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CI Financial paid out a comfortable 31% of its profit last year.
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 consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at CI Financial, with earnings per share up 5.3% on average over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. CI Financial has seen its dividend decline 2.2% per annum on average over the past 10 years, which is not great to see. CI Financial is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
Final Takeaway
Should investors buy CI Financial for the upcoming dividend? CI Financial has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, CI Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in CI Financial for the dividends alone, you should always be mindful of the risks involved. For instance, we've identified 2 warning signs for CI Financial (1 shouldn't be ignored) you should be aware of.
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.
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