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Investors who want to cash in on Industrial Alliance Insurance and Financial Services Inc’s (TSE:IAG) upcoming dividend of CA$0.41 per share have only 2 days left to buy the shares before its ex-dividend date, 23 August 2018, in time for dividends payable on the 17 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Industrial Alliance Insurance and Financial Services’s latest financial data to analyse its dividend characteristics.

Check out our latest analysis for Industrial Alliance Insurance and Financial Services

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

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

• Is its earnings sufficient to payout dividend at the current rate?

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

How well does Industrial Alliance Insurance and Financial Services fit our criteria?

The current trailing twelve-month payout ratio for the stock is 29.07%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 30.29%, leading to a dividend yield of 3.12%. Furthermore, EPS should increase to CA$5.72.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. IAG has increased its DPS from CA$0.98 to CA$1.66 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.

Relative to peers, Industrial Alliance Insurance and Financial Services has a yield of 3.08%, which is on the low-side for Insurance stocks.

Next Steps:

With this in mind, I definitely rank Industrial Alliance Insurance and Financial Services 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 key aspects you should further research:

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

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

3. Other 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.