Yahoo Finance Here's What We Like About Manulife Financial's (TSE:MFC) Upcoming Dividend
Readers hoping to buy Manulife Financial Corporation (TSE:MFC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Manulife Financial's shares on or after the 24th of May, you won't be eligible to receive the dividend, when it is paid on the 20th of June.
The company's next dividend payment will be CA$0.33 per share, on the back of last year when the company paid a total of CA$1.32 to shareholders. Based on the last year's worth of payments, Manulife Financial has a trailing yield of 5.8% on the current stock price of CA$22.73. If you buy this business for its dividend, you should have an idea of whether Manulife Financial's dividend is reliable and sustainable. As a result, readers should always check whether Manulife Financial has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Manulife Financial
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Manulife Financial paying out a modest 25% of its earnings.
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. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Manulife Financial's earnings have been skyrocketing, up 27% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Manulife Financial has delivered 9.8% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
Should investors buy Manulife Financial for the upcoming dividend? Companies like Manulife Financial that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Manulife Financial more closely.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. To help with this, we've discovered 1 warning sign for Manulife Financial that you should be aware of before investing in their shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.
