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Investors who want to cash in on Manulife Financial Corporation's (TSE:MFC) upcoming dividend of CA$0.25 per share have only 4 days left to buy the shares before its ex-dividend date, 13 May 2019, in time for dividends payable on the 19 June 2019. 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.
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Manulife Financial fare?
The current trailing twelve-month payout ratio for the stock is 34%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect MFC's payout to remain around the same level at 34% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.4%. Furthermore, EPS should increase to CA$3.11.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of MFC it has increased its DPS from CA$0.52 to CA$1 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. This is an impressive feat, which makes MFC a true dividend rockstar.
In terms of its peers, Manulife Financial generates a yield of 4.1%, which is high for Insurance stocks but still below the market's top dividend payers.
With this in mind, I definitely rank Manulife Financial as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. I've put together three fundamental aspects you should further research:
- 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.
- 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.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.