Laurentian Bank of Canada's (TSE:LB) Dividend Will Be CA$0.47
Laurentian Bank of Canada's (TSE:LB) investors are due to receive a payment of CA$0.47 per share on 1st of February. The dividend yield will be 7.4% based on this payment which is still above the industry average.
See our latest analysis for Laurentian Bank of Canada
Laurentian Bank of Canada's Dividend Forecasted To Be Well Covered By Earnings
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Having distributed dividends for at least 10 years, Laurentian Bank of Canada has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 48%, which means that Laurentian Bank of Canada would be able to pay its last dividend without pressure on the balance sheet.
The next 3 years are set to see EPS grow by 18.0%. Analysts forecast the future payout ratio could be 41% over the same time horizon, which is a number we think the company can maintain.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of CA$1.96 in 2013 to the most recent total annual payment of CA$1.88. Payments have been decreasing at a very slow pace in this time period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
Dividend Growth May Be Hard To Come By
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's not great to see that Laurentian Bank of Canada's earnings per share has fallen at approximately 5.3% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.
Our Thoughts On Laurentian Bank of Canada's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Laurentian Bank of Canada is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Laurentian Bank of Canada that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
