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Canaccord Genuity Group Inc. (TSE:CF) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Simply Wall St

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.

historic-dividend
historic-dividend

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.

In light of that, while Canaccord Genuity Group has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 3 warning signs for Canaccord Genuity Group you should know about.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.