Yahoo Finance IGM Financial (TSE:IGM) Is Paying Out A Dividend Of CA$0.5625
IGM Financial Inc.'s (TSE:IGM) investors are due to receive a payment of CA$0.5625 per share on 28th of April. This means the annual payment is 5.4% of the current stock price, which is above the average for the industry.
See our latest analysis for IGM Financial
IGM Financial's Dividend Is Well Covered By Earnings
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, IGM Financial was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.
The next year is set to see EPS grow by 0.9%. If the dividend continues on this path, the payout ratio could be 61% by next year, which we think can be pretty sustainable going forward.
IGM Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was CA$2.15, compared to the most recent full-year payment of CA$2.25. Dividend payments have been growing, but very slowly over the period. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
IGM Financial Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that IGM Financial has grown earnings per share at 7.8% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
Our Thoughts On IGM Financial's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for IGM Financial that you should be aware of before investing. Is IGM Financial not quite the opportunity you were looking for? Why not check out 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.
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