Stock Analysis

Laurentian Bank of Canada (TSE:LB) Is Paying Out A Larger Dividend Than Last Year

TSX:LB
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Laurentian Bank of Canada (TSE:LB) will increase its dividend from last year's comparable payment on the 1st of February to CA$0.46. This takes the annual payment to 5.5% of the current stock price, which is about average for the industry.

Check out our latest analysis for Laurentian Bank of Canada

Laurentian Bank of Canada's Earnings Will Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is 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. Past distributions do not necessarily guarantee future ones, but Laurentian Bank of Canada's payout ratio of 36% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 7.2%. The future payout ratio could be 38% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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TSX:LB Historic Dividend December 13th 2022

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$1.80 in 2012 to the most recent total annual payment of CA$1.84. Dividend payments have been growing, but very slowly over the period. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Laurentian Bank of Canada hasn't seen much change in its earnings per share over the last five years.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Laurentian Bank of Canada's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Laurentian Bank of Canada has been making. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for Laurentian Bank of Canada (of which 2 are potentially serious!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Valuation is complex, but we're helping make it simple.

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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.