Yahoo Finance Does Intact Financial Corporation (TSE:IFC) Have A Place In Your Portfolio?
There is a lot to be liked about Intact Financial Corporation (TSE:IFC) as an income stock. It has paid dividends over the past 10 years. The company currently pays out a dividend yield of 2.8% to shareholders, making it a relatively attractive dividend stock. Does Intact Financial tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Intact Financial
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it paying an annual yield above 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How does Intact Financial fare?
The current trailing twelve-month payout ratio for the stock is 58%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect IFC’s payout to fall to 41% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.1%. However, EPS should increase to CA$6.61, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of IFC it has increased its DPS from CA$1.24 to CA$2.8 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes IFC a true dividend rockstar.
Compared to its peers, Intact Financial generates a yield of 2.8%, which is on the low-side for Insurance stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Intact Financial is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for IFC’s future growth? Take a look at our free research report of analyst consensus for IFC’s outlook.
Valuation: What is IFC 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 IFC is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger 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.
