Manulife Financial (TSE:MFC) Is Increasing Its Dividend To CA$0.44

The board of Manulife Financial Corporation (TSE:MFC) has announced that it will be paying its dividend of CA$0.44 on the 19th of March, an increased payment from last year's comparable dividend. This takes the annual payment to 4.1% of the current stock price, which is about average for the industry.

View our latest analysis for Manulife Financial

Manulife Financial's Future Dividend Projections Appear Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last dividend was quite easily covered by Manulife Financial'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 68.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.

Manulife Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was CA$0.52 in 2015, and the most recent fiscal year payment was CA$1.76. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Manulife Financial hasn't seen much change in its earnings per share over the last five years. Manulife Financial is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

We Really Like Manulife Financial's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 11 Manulife Financial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Manulife Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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