Yahoo Finance Dividend Hunters Should Consider Power Financial Corporation (TSE:PWF), With A 6.7% Yield
If you are an income investor, then Power Financial Corporation (TSE:PWF) should be on your radar. Power Financial Corporation provides financial services in Canada, the United States, Europe, and Asia. Over the past 10 years, the CA$18b market cap company has been growing its dividend payments, from CA$1.4 to CA$1.73. Currently yielding 6.7%, let’s take a closer look at Power Financial’s dividend profile.
See our latest analysis for Power Financial
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
It is paying an annual yield above 75% of dividend payers
It has paid dividend every year without dramatically reducing payout in the past
Its dividend per share amount has increased over the past
It is able to pay the current rate of dividends from its earnings
It has the ability to keep paying its dividends going forward
High Yield And Dependable
The company’s dividend yield stands at 6.7%, which is high for Insurance stocks. But the real reason Power Financial stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. PWF has increased its DPS from CA$1.4 to CA$1.73 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Power Financial has a trailing twelve-month payout ratio of 61%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 51% which, assuming the share price stays the same, leads to a dividend yield of around 7.1%. However, EPS should increase to CA$3.39, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Next Steps:
There aren’t many other stocks out there with the same track record as Power Financial, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three fundamental factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for PWF’s future growth? Take a look at our free research report of analyst consensus for PWF’s outlook.
Valuation: What is PWF worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PWF is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
