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Great-West Lifeco's (TSE:GWO) Shareholders Will Receive A Bigger Dividend Than Last Year

Great-West Lifeco Inc. (TSE:GWO) will increase its dividend from last year's comparable payment on the 31st of March to CA$0.52. This takes the dividend yield to 5.7%, which shareholders will be pleased with.

See our latest analysis for Great-West Lifeco

Great-West Lifeco's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Great-West Lifeco's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

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Over the next year, EPS is forecast to expand by 4.8%. If the dividend continues on this path, the payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.

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Great-West Lifeco Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was CA$1.23 in 2013, and the most recent fiscal year payment was CA$2.08. This means that it has been growing its distributions at 5.4% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Great-West Lifeco Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Great-West Lifeco has impressed us by growing EPS at 9.7% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Great-West Lifeco's Dividend

Overall, a dividend increase is always good, and we think that Great-West Lifeco is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for Great-West Lifeco for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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