Stock Analysis

Should Power Corporation of Canada (TSE:POW) Be Part Of Your Dividend Portfolio?

TSX:POW
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There is a lot to be liked about Power Corporation of Canada (TSX:POW) as an income stock, over the past 10 years it has returned an average of 4.00% per year. The stock currently pays out a dividend yield of 4.70%, and has a market cap of CA$14.23B. Should it have a place in your portfolio? Let's take a look at Power of Canada in more detail. View our latest analysis for Power of Canada

5 checks you should do on a dividend stock

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?
  • Does it consistently pay out dividends without missing a payment or significantly cutting payout?
  • Has dividend per share risen in the past couple of years?
  • Can it afford to pay the current rate of dividends from its earnings?
  • Will it be able to continue to payout at the current rate in the future?

TSX:POW Historical Dividend Yield Feb 24th 18
TSX:POW Historical Dividend Yield Feb 24th 18

How does Power of Canada fare?

The company currently pays out 41.83% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 44.27%, leading to a dividend yield of 4.89%. Furthermore, EPS is forecasted to fall to CA$3.15 in the upcoming year. 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. 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. Relative to peers, Power of Canada produces a yield of 4.70%, which is high for Insurance stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Power of Canada is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I've compiled three relevant aspects you should look at:

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.

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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.