Here's What We Like About Great-West Lifeco's (TSE:GWO) Upcoming Dividend

It looks like Great-West Lifeco Inc. (TSE:GWO) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Great-West Lifeco's shares on or after the 2nd of June, you won't be eligible to receive the dividend, when it is paid on the 30th of June.

The company's upcoming dividend is CA$0.61 a share, following on from the last 12 months, when the company distributed a total of CA$2.44 per share to shareholders. Calculating the last year's worth of payments shows that Great-West Lifeco has a trailing yield of 4.7% on the current share price of CA$52.15. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Great-West Lifeco paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

See our latest analysis for Great-West Lifeco

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Great-West Lifeco's earnings per share have risen 11% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Great-West Lifeco has lifted its dividend by approximately 7.1% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is Great-West Lifeco worth buying for its dividend? Great-West Lifeco has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Overall, Great-West Lifeco looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Ever wonder what the future holds for Great-West Lifeco? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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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.