Important news for shareholders and potential investors in Intact Financial Corporation (TSX:IFC): The dividend payment of CA$0.7 per share will be distributed into shareholder on 29 June 2018, and the stock will begin trading ex-dividend at an earlier date, 14 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Intact Financial’s latest financial data to analyse its dividend characteristics. View our latest analysis for Intact Financial
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 it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment or significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Intact Financial fit our criteria?
Intact Financial has a trailing twelve-month payout ratio of 49.25%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect IFC’s payout to fall to 39.28% of its earnings, which leads to a dividend yield of 3.02%. However, EPS should increase to CA$6.03, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of IFC it has increased its DPS from CA$1.24 to CA$2.8 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, Intact Financial has a yield of 2.89%, which is on the low-side for Insurance stocks.
With these dividend metrics in mind, I definitely rank Intact Financial as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three pertinent aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for IFC’s future growth? Take a look at our free research report of analyst consensus for IFC’s outlook.
- Valuation: What is IFC 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 IFC 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.
To help readers see pass 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.