iA Financial's (TSE:IAG) Dividend Will Be Increased To CA$0.675

iA Financial Corporation Inc. (TSE:IAG) will increase its dividend from last year's comparable payment on the 15th of September to CA$0.675. This makes the dividend yield about the same as the industry average at 3.9%.

View our latest analysis for iA Financial

iA Financial's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, iA Financial's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 11.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

iA Financial Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was CA$0.98 in 2012, and the most recent fiscal year payment was CA$2.70. This means that it has been growing its distributions at 11% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See iA Financial's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that iA Financial has grown earnings per share at 8.0% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for iA Financial's prospects of growing its dividend payments in the future.

iA Financial Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for iA Financial for free with public analyst estimates for the company. Is iA Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.