Yahoo Finance Is Genworth MI Canada Inc. (TSE:MIC) A Great Dividend Stock?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Genworth MI Canada Inc. (TSE:MIC) has been paying a dividend to shareholders. Today it yields 4.5%. Let’s dig deeper into whether Genworth MI Canada should have a place in your portfolio.
See our latest analysis for Genworth MI Canada
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
Does Genworth MI Canada pass our checks?
Genworth MI Canada has a trailing twelve-month payout ratio of 38%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect MIC’s payout to remain around the same level at 40% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 4.7%. Moreover, EPS should increase to CA$5.26.
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. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. Unfortunately, it is really too early to view Genworth MI Canada as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Genworth MI Canada produces a yield of 4.5%, which is on the low-side for Mortgage stocks.
Next Steps:
Taking all the above into account, Genworth MI Canada is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that 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. Below, I’ve compiled three pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for MIC’s future growth? Take a look at our free research report of analyst consensus for MIC’s outlook.
Valuation: What is MIC 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 MIC is currently mispriced by the market.
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.
