Power Corporation of Canada (TSE:POW) Has Re-Affirmed Its Dividend Of CA$0.45

The board of Power Corporation of Canada (TSE:POW) has announced that it will pay a dividend of CA$0.45 per share on the 1st of November. This means the dividend yield will be fairly typical at 4.3%.

Check out our latest analysis for Power Corporation of Canada

Power Corporation of Canada's Earnings Easily Cover the Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. The last dividend was quite easily covered by Power Corporation of Canada's earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 3.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.

Power Corporation of Canada Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from CA$1.16 in 2011 to the most recent annual payment of CA$1.79. This works out to be a compound annual growth rate (CAGR) of approximately 4.4% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Power Corporation of Canada has seen EPS rising for the last five years, at 10% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Power Corporation of Canada'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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Power Corporation of Canada (of which 1 is potentially serious!) you should know about. We have also put together a list of global stocks with a solid dividend.

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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.
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