In This Article:
First National Financial Corporation (TSE:FN) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, First National Financial investors that purchase the stock on or after the 28th of September will not receive the dividend, which will be paid on the 16th of October.
The company's next dividend payment will be CA$0.20 per share. Last year, in total, the company distributed CA$2.40 to shareholders. Based on the last year's worth of payments, First National Financial has a trailing yield of 6.6% on the current stock price of CA$36.64. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether First National Financial can afford its dividend, and if the dividend could grow.
See our latest analysis for First National Financial
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. First National Financial paid out 70% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about First National Financial's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. First National Financial has delivered an average of 6.3% per year annual increase in its dividend, based on the past 10 years of dividend payments.