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Canaccord Genuity Group Inc. (TSE:CF) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 27th of August to receive the dividend, which will be paid on the 10th of September.
Canaccord Genuity Group's next dividend payment will be CA$0.055 per share. Last year, in total, the company distributed CA$0.20 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$7.7. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Canaccord Genuity Group can afford its dividend, and if the dividend could grow.
See our latest analysis for Canaccord Genuity Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Canaccord Genuity Group is paying out just 24% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Canaccord Genuity Group has grown its earnings rapidly, up 68% 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's dividend payments are broadly unchanged compared to where they were 10 years ago.
To Sum It Up
From a dividend perspective, should investors buy or avoid Canaccord Genuity Group? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, Canaccord Genuity Group looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.