Laurentian Bank of Canada's Dividend Analysis
Understanding the Sustainability of LRCDF's Upcoming Dividend
Laurentian Bank of Canada (LRCDF) recently announced a dividend of $0.47 per share, payable on 2024-02-01, with the ex-dividend date set for 2024-01-02. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Laurentian Bank of Canada's dividend performance and assess its sustainability.
What Does Laurentian Bank of Canada Do?
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Laurentian Bank of Canada provides personal banking, business banking, and real estate and commercial financing to its personal, business, and institutional customers across Canada and the United States. The company reports three operating segments: personal, commercial banking, and capital markets. The personal segment offers financial services to retail clients. The commercial banking segment provides financial services, commercial banking, real estate financing, and equipment and inventory financing to business clients. The firm launched LBC Digital, allowing it to expand its customer reach from coast to coast through a direct-to-customer channel. The Canadian geographic segment generates the majority of the revenue for the company.
A Glimpse at Laurentian Bank of Canada's Dividend History
Laurentian Bank of Canada has maintained a consistent dividend payment record since 2003, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Laurentian Bank of Canada's Dividend Yield and Growth
As of today, Laurentian Bank of Canada currently has a 12-month trailing dividend yield of 6.58% and a 12-month forward dividend yield of 6.60%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Laurentian Bank of Canada's annual dividend growth rate was -4.60%. Extended to a five-year horizon, this rate decreased to -8.20% per year. And over the past decade, Laurentian Bank of Canada's annual dividends per share growth rate stands at -1.80%.
Based on Laurentian Bank of Canada's dividend yield and five-year growth rate, the 5-year yield on cost of Laurentian Bank of Canada stock as of today is approximately 4.29%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, Laurentian Bank of Canada's dividend payout ratio is 0.48.
Laurentian Bank of Canada's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Laurentian Bank of Canada's profitability 4 out of 10 as of 2023-10-31, suggesting the dividend may not be sustainable. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Laurentian Bank of Canada's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Laurentian Bank of Canada's revenue has increased by approximately 1.40% per year on average, a rate that underperforms approximately 77.89% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. Laurentian Bank of Canada's earnings increased by approximately 15.50% per year on average, a rate that underperforms approximately 31.25% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 0.10%, which underperforms approximately 77.57% of global competitors.
Next Steps
In conclusion, while Laurentian Bank of Canada offers a noteworthy dividend yield, its negative dividend growth rate, moderate payout ratio, and low profitability and growth ranks may raise concerns about the sustainability of its dividends. Investors should consider these factors in light of their investment strategy and risk tolerance. For those seeking dividend-paying stocks, Laurentian Bank of Canada's current offering may be attractive, but it's crucial to keep an eye on the company's financial health and market position. Will Laurentian Bank of Canada manage to maintain its dividend payments? Only time and a close examination of the company's future performance will tell.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
