Be Sure To Check Out First National Financial Corporation (TSE:FN) Before It Goes Ex-Dividend

By
Simply Wall St
Published
November 24, 2021
TSX:FN
Source: Shutterstock

First National Financial Corporation (TSE:FN) stock is about to trade ex-dividend in 4 days. The ex-dividend date is usually set to be one business day 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase First National Financial's shares before the 29th of November to receive the dividend, which will be paid on the 15th of December.

The company's next dividend payment will be CA$1.45 per share, on the back of last year when the company paid a total of CA$2.85 to shareholders. Based on the last year's worth of payments, First National Financial stock has a trailing yield of around 8.1% on the current share price of CA$44.65. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether First National Financial has been able to grow its dividends, or if the dividend might be cut.

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 more than half (60%) of its earnings last year, which is a regular payout ratio for most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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TSX:FN Historic Dividend November 24th 2021

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see First National Financial's earnings per share have risen 16% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, First National Financial has increased its dividend at approximately 9.1% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

From a dividend perspective, should investors buy or avoid First National Financial? Earnings per share are growing at an attractive rate, and First National Financial is paying out a bit over half its profits. Overall, First National Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Curious what other investors think of First National Financial? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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