Income Investors Should Know The Manulife Financial Corporation (TSE:MFC) Ex-Dividend Date

Attention dividend hunters! Manulife Financial Corporation (TSE:MFC) will be distributing its dividend of CA$0.25 per share on the 19 December 2018, and will start trading ex-dividend in 4 days time on the 19 November 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Manulife Financial’s latest financial data to analyse its dividend attributes.

Check out our latest analysis for Manulife Financial

How I analyze a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Does it pay an annual yield higher than 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has it increased its dividend per share amount over the past?

• Does earnings amply cover its dividend payments?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

TSX:MFC Historical Dividend Yield November 14th 18

How well does Manulife Financial fit our criteria?

Manulife Financial has a trailing twelve-month payout ratio of 70%, which means that the dividend is covered by earnings. However, going forward, analysts expect MFC’s payout to fall to 34% of its earnings, which leads to a dividend yield of 4.4%. However, EPS should increase to CA$2.74, 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. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from Manulife Financial have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

In terms of its peers, Manulife Financial produces a yield of 4.5%, which is high for Insurance stocks but still below the market’s top dividend payers.

Next Steps:

If Manulife Financial is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 key aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for MFC’s future growth? Take a look at our free research report of analyst consensus for MFC’s outlook.

2. Valuation: What is MFC 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 MFC is currently mispriced by the market.

3. 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.