Yahoo Finance Interested In Stantec Inc. (TSE:STN)’s Upcoming 0.4% Dividend? You Have 2 Days Left
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Stantec Inc. (TSE:STN) is about to go ex-dividend in just 2 days. This means that investors who purchase shares on or after the 27th of December will not receive the dividend, which will be paid on the 15th of January.
Stantec's next dividend payment will be CA$0.14 per share, on the back of last year when the company paid a total of CA$0.58 to shareholders. Calculating the last year's worth of payments shows that Stantec has a trailing yield of 1.6% on the current share price of CA$36.98. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Stantec has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Stantec
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Stantec's payout ratio is modest, at just 37% of profit. A useful secondary check can be to evaluate whether Stantec generated enough free cash flow to afford its dividend. It paid out 24% of its free cash flow as dividends last year, which is conservatively low.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Stantec's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past eight years, Stantec has increased its dividend at approximately 8.6% a year on average.
The Bottom Line
Is Stantec an attractive dividend stock, or better left on the shelf? While it's not great to see that earnings per share are effectively flat over the eight-year period we checked, at least the payout ratios are low and conservative. In summary, it's hard to get excited about Stantec from a dividend perspective.
Wondering what the future holds for Stantec? See what the 11 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
