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It looks like Canaccord Genuity Group Inc. (TSE:CF) is about to go ex-dividend in the next two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Canaccord Genuity Group's shares before the 24th of February in order to be eligible for the dividend, which will be paid on the 10th of March.
The company's next dividend payment will be CA$0.085 per share. Last year, in total, the company distributed CA$0.34 to shareholders. Calculating the last year's worth of payments shows that Canaccord Genuity Group has a trailing yield of 2.6% on the current share price of CA$13.25. If you buy this business for its dividend, you should have an idea of whether Canaccord Genuity Group's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Canaccord Genuity Group paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Canaccord Genuity Group has grown its earnings rapidly, up 58% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Canaccord Genuity Group has seen its dividend decline 1.6% per annum on average over the past 10 years, which is not great to see.
The Bottom Line
Should investors buy Canaccord Genuity Group for the upcoming dividend? Companies like Canaccord Genuity Group that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Canaccord Genuity Group ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
In light of that, while Canaccord Genuity Group has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 2 warning signs for Canaccord Genuity Group you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.