Finance
Interested In Manulife Financial’s (TSE:MFC) Upcoming CA$0.40 Dividend? You Have Four Days Left
Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Manulife Financial Corporation (TSE:MFC) is about to trade ex-dividend in the next 4 days. 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, Manulife Financial investors that purchase the stock on or after the 20th of November will not receive the dividend, which will be paid on the 19th of December.
The company’s next dividend payment will be CA$0.40 per share. Last year, in total, the company distributed CA$1.60 to shareholders. Looking at the last 12 months of distributions, Manulife Financial has a trailing yield of approximately 3.5% on its current stock price of CA$46.23. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Manulife Financial can afford its dividend, and if the dividend could grow.
View our latest analysis for Manulife Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Manulife Financial paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
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 Manulife Financial, with earnings per share up 4.5% 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. In the past 10 years, Manulife Financial has increased its dividend at approximately 12% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
From a dividend perspective, should investors buy or avoid Manulife Financial? Manulife Financial has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn’t look like a clear opportunity right now.
Ever wonder what the future holds for Manulife Financial? See what the 11 analysts we track 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.
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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.