Read This Before Considering Great-West Lifeco Inc. (TSE:GWO) For Its Upcoming CA$0.41 Dividend

Great-West Lifeco Inc. (TSE:GWO) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 2nd of December in order to receive the dividend, which the company will pay on the 31st of December.

Great-West Lifeco's next dividend payment will be CA$0.41 per share, on the back of last year when the company paid a total of CA$1.65 to shareholders. Based on the last year's worth of payments, Great-West Lifeco stock has a trailing yield of around 5.0% on the current share price of CA$33.21. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Great-West Lifeco has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Great-West Lifeco

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. Great-West Lifeco is paying out an acceptable 61% of its profit, a common payout level among most companies.

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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Great-West Lifeco, with earnings per share up 2.6% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Great-West Lifeco has delivered an average of 3.0% per year annual increase in its dividend, based on the past ten years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is Great-West Lifeco worth buying for its dividend? Earnings per share have been growing at a reasonable rate, and the company is paying out a bit over half its earnings as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

Ever wonder what the future holds for Great-West Lifeco? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.