Why It Might Not Make Sense To Buy Canaccord Genuity Group Inc. (TSE:CF) For Its Upcoming Dividend

It looks like Canaccord Genuity Group Inc. (TSE:CF) is about to go ex-dividend in the next four 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 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. Thus, you can purchase Canaccord Genuity Group's shares before the 28th of February in order to receive the dividend, which the company will pay on the 13th of March.

The company's next dividend payment will be CA$0.085 per share. Last year, in total, the company distributed CA$0.34 to shareholders. Based on the last year's worth of payments, Canaccord Genuity Group has a trailing yield of 4.0% on the current stock price of CA$8.56. 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! So we need to investigate whether Canaccord Genuity Group can afford its dividend, and if the dividend could grow.

View our latest analysis for Canaccord Genuity Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Canaccord Genuity Group reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Canaccord Genuity Group was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Canaccord Genuity Group has increased its dividend at approximately 5.4% a year on average.

Remember, you can always get a snapshot of Canaccord Genuity Group's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Canaccord Genuity Group? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that being said, if you're still considering Canaccord Genuity Group as an investment, you'll find it beneficial to know what risks this stock is facing. For instance, we've identified 3 warning signs for Canaccord Genuity Group (1 is concerning) you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.