Should You Buy CI Financial Corp (TSE:CIX) For Its Upcoming Dividend?

It looks like CI Financial Corp (TSE:CIX) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 30th of March to receive the dividend, which will be paid on the 15th of April.

CI Financial's next dividend payment will be CA$0.18 per share, and in the last 12 months, the company paid a total of CA$0.72 per share. Looking at the last 12 months of distributions, CI Financial has a trailing yield of approximately 3.9% on its current stock price of CA$18.51. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for CI Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CI Financial paid out a comfortable 32% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 CI Financial, with earnings per share up 2.3% on average 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. CI Financial's dividend payments are broadly unchanged compared to where they were 10 years ago.

Final Takeaway

Is CI Financial an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. CI Financial ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while CI Financial looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 2 warning signs with CI Financial and understanding them should be part of your investment process.

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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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. 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.
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