Stock Analysis

Read This Before Buying Power Corporation of Canada (TSE:POW) For Its Upcoming $0.36 Dividend

TSX:POW
Source: Shutterstock

Important news for shareholders and potential investors in Power Corporation of Canada (TSX:POW): The dividend payment of CA$0.36 per share will be distributed into shareholder on 29 March 2018, and the stock will begin trading ex-dividend at an earlier date, 07 March 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at Power of Canada's most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Power of Canada

What Is A Dividend Rock Star?

It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:

  • It is paying an annual yield above 75% of dividend payers
  • It consistently pays out dividend without missing a payment or significantly cutting payout
  • Its dividend per share amount has increased over the past
  • It is able to pay the current rate of dividends from its earnings
  • It is able to continue to payout at the current rate in the future
  • High Yield And Dependable

    Power of Canada's dividend yield stands at 4.78%, which is high for Insurance stocks. But the real reason Power of Canada stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you're investor who wants a robust cash inflow from your portfolio over a long period of time.

    TSX:POW Historical Dividend Yield Mar 3rd 18
    TSX:POW Historical Dividend Yield Mar 3rd 18
    If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. POW has increased its DPS from CA$0.97 to CA$1.43 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. The company currently pays out 41.83% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 44.44%, leading to a dividend yield of 4.97%. Moreover, EPS is forecasted to fall to CA$3.15 in the upcoming year.

    Next Steps:

    With Power of Canada producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a top dividend generator moving forward. However, given 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. I've put together three essential aspects you should further research:

    1. Future Outlook: What are well-informed industry analysts predicting for POW’s future growth? Take a look at our free research report of analyst consensus for POW’s outlook.
    2. Valuation: What is POW 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 POW is currently mispriced by the market.
    3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.

    Valuation is complex, but we're helping make it simple.

    Find out whether Power Corporation of Canada is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

    View the Free Analysis

    Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

    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.