iA Financial Corporation Inc. (TSE:IAG) Passed Our Checks, And It’s About To Pay A CA$0.99 Dividend

iA Financial Corporation Inc. (TSE:IAG) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date, which is the day on which shareholders need to be on the company’s books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least one business day to settle. This means that investors who purchase iA Financial’s shares on or after the 21st of November will not receive the dividend, which will be paid on the 15th of December.

The company’s next dividend payment will be CA$0.99 per share, and in the last 12 months, the company paid a total of CA$3.96 per share. Calculating the last year’s worth of payments shows that iA Financial has a trailing yield of 2.4% on the current share price of CA$164.79. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether iA Financial has been able to grow its dividends, or if the dividend might be cut.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That’s why it’s good to see iA Financial paying out a modest 31% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

See our latest analysis for iA Financial

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we’re glad to see iA Financial’s earnings per share have risen 13% per annum over the last five years.

Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. iA Financial has delivered 13% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Should investors buy iA Financial for the upcoming dividend? Companies like iA Financial that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating iA Financial more closely.

Ever wonder what the future holds for iA Financial? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

Generally, we wouldn’t recommend just buying the first dividend stock you see. Here’s a curated list of interesting stocks that are strong dividend payers.

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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.