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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Intact Financial Corporation (TSE:IFC) is about to go ex-dividend in just 4 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Accordingly, Intact Financial investors that purchase the stock on or after the 14th of March will not receive the dividend, which will be paid on the 31st of March.
The company's next dividend payment will be CA$1.33 per share, and in the last 12 months, the company paid a total of CA$5.32 per share. Last year's total dividend payments show that Intact Financial has a trailing yield of 1.8% on the current share price of CA$290.40. If you buy this business for its dividend, you should have an idea of whether Intact Financial's dividend is reliable and sustainable. So we need to investigate whether Intact Financial can afford its dividend, and if the dividend could grow.
View our latest analysis for Intact Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Intact Financial's payout ratio is modest, at just 39% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Intact Financial's earnings per share have been growing at 19% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Intact Financial has lifted its dividend by approximately 11% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.