Should Income Investors Buy Industrial Alliance Insurance and Financial Services Inc (TSE:IAG) Before Its Ex-Dividend?

By
Simply Wall St
Published
May 14, 2018
TSX:IAG
Source: Shutterstock

If you are interested in cashing in on Industrial Alliance Insurance and Financial Services Inc's (TSX:IAG) upcoming dividend of CA$0.38 per share, you only have 9 days left to buy the shares before its ex-dividend date, 24 May 2018, in time for dividends payable on the 15 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Industrial Alliance Insurance and Financial Services's latest financial data to analyse its dividend characteristics. View our latest analysis for Industrial Alliance Insurance and Financial Services

Here's how I find good dividend stocks

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

  • Does it pay an annual yield higher than 75% of dividend payers?
  • Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
  • Has it increased its dividend per share amount over the past?
  • Is it able to pay the current rate of dividends from its earnings?
  • Will it have the ability to keep paying its dividends going forward?

TSX:IAG Historical Dividend Yield May 14th 18
TSX:IAG Historical Dividend Yield May 14th 18

How does Industrial Alliance Insurance and Financial Services fare?

The company currently pays out 29.10% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect IAG's payout to remain around the same level at 29.44% of its earnings, which leads to a dividend yield of around 3.17%. Moreover, EPS should increase to CA$5.5. 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. In the case of IAG it has increased its DPS from CA$0.9 to CA$1.52 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Industrial Alliance Insurance and Financial Services has a yield of 2.92%, which is on the low-side for Insurance stocks.

Next Steps:

Taking into account the dividend metrics, Industrial Alliance Insurance and Financial Services ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three fundamental factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for IAG’s future growth? Take a look at our free research report of analyst consensus for IAG’s outlook.
  2. Valuation: What is IAG 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 IAG 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.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.

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