Read This Before Considering Manulife Financial Corporation (TSE:MFC) For Its Upcoming CA$0.44 Dividend

Readers hoping to buy Manulife Financial Corporation (TSE:MFC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date, which is the date on which a company determines the shareholders eligible 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. Accordingly, Manulife Financial investors that purchase the stock on or after the 26th of November will not receive the dividend, which will be paid on the 19th of December.

The company’s next dividend payment will be CA$0.44 per share. Last year, in total, the company distributed CA$1.76 to shareholders. Based on the last year’s worth of payments, Manulife Financial stock has a trailing yield of around 3.6% on the current share price of CA$48.66. If you buy this business for its dividend, you should have an idea of whether Manulife Financial’s dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it’s growing.

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 typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Manulife Financial paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.

View our latest analysis for Manulife Financial

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

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. This is why it’s a relief to see Manulife Financial earnings per share are up 2.9% 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. In the last 10 years, Manulife Financial has lifted its dividend by approximately 10.0% a year on average. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

From a dividend perspective, should investors buy or avoid Manulife Financial? Manulife Financial has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We’re unconvinced on the company’s merits, and think there might be better opportunities out there.

Ever wonder what the future holds for Manulife Financial? See what the 11 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

If you’re in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.