Is Buying CI Financial Corp (TSE:CIX) For Its Upcoming $0.12 Dividend A Good Choice?

Investors who want to cash in on CI Financial Corp’s (TSX:CIX) upcoming dividend of CA$0.12 per share have only 3 days left to buy the shares before its ex-dividend date, 27 April 2018, in time for dividends payable on the 15 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine CI Financial’s latest financial data to analyse its dividend characteristics. See our latest analysis for CI Financial

Here’s how I find good dividend stocks

If you are a dividend investor, you should always assess these five key metrics:

  • Is it paying an annual yield above 75% of dividend payers?
  • Has it paid dividend every year without dramatically reducing payout in the past?
  • Has dividend per share amount increased over the past?
  • Does earnings amply cover its dividend payments?
  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

TSX:CIX Historical Dividend Yield Apr 23rd 18
TSX:CIX Historical Dividend Yield Apr 23rd 18

How does CI Financial fare?

CI Financial has a trailing twelve-month payout ratio of 73.79%, which means that the dividend is covered by earnings. However, going forward, analysts expect CIX’s payout to fall to 56.18% of its earnings, which leads to a dividend yield of 5.46%. However, EPS should increase to CA$2.37, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Dividend payments from CI Financial have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends. Relative to peers, CI Financial has a yield of 5.27%, which is high for Capital Markets stocks.

Next Steps:

Keeping in mind the dividend characteristics above, CI Financial is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for CIX’s future growth? Take a look at our free research report of analyst consensus for CIX’s outlook.
  2. Valuation: What is CIX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CIX is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.