Stock Analysis

Great-West Lifeco's (TSE:GWO) Dividend Will Be CA$0.49

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Great-West Lifeco Inc.'s (TSE:GWO) investors are due to receive a payment of CA$0.49 per share on 30th of December. The dividend yield will be 6.1% based on this payment which is still above the industry average.

Check out the opportunities and risks within the CA Insurance industry.

Great-West Lifeco's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Great-West Lifeco's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 26.1%. If the dividend continues on this path, the payout ratio could be 52% by next year, which we think can be pretty sustainable going forward.

TSX:GWO Historic Dividend November 16th 2022

Great-West Lifeco Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the dividend has gone from CA$1.23 total annually to CA$1.96. This means that it has been growing its distributions at 4.8% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Great-West Lifeco has seen EPS rising for the last five years, at 5.2% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Great-West Lifeco's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 7 Great-West Lifeco analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Great-West Lifeco not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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Find out whether Great-West Lifeco is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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