Laurentian Bank of Canada (TSE: LB) announced a dividend of C $ 0.40
Laurentian Bank of Canada (TSE: LB) Investors are expected to receive a payment of C $ 0.40 per share on November 1. This means that the dividend yield will be fairly typical at 3.9%.
Consult our latest analysis for Laurentian Bank of Canada
Laurentian Bank of Canada profits easily cover distributions
We like to see a good dividend yield, but that only helps us if the payout can continue. However, the profits of the Laurentian Bank of Canada easily cover the dividend. This means that most of its profits are kept to grow the business.
Over the next year, EPS is expected to increase 1.7%. If the dividend continues according to recent trends, we estimate that the payout ratio will be 37%, which is within the range that puts us at ease with the sustainability of the dividend.
The history of the company’s dividends has been marked by instability, with at least one decline in the past 10 years. The first annual payment in the last 10 years was C $ 1.56 in 2011, and the payment for the most recent year was C $ 1.60. Dividend payouts have increased by less than 1% per year during this period. We are happy to see that the dividend has increased, but with a limited growth rate and fluctuations in payments, the total shareholder return may be limited.
Dividend growth can be hard to achieve
With a relatively volatile dividend, it is even more important to see if earnings per share increase. Profits have grown 4.0% per year for the past five years, which admittedly is a bit slow. Although EPS growth is quite low, Laurentian Bank of Canada has the option of increasing the payout ratio to return more money to shareholders.
Overall, we think Laurentian Bank of Canada is a solid choice as a dividend-paying stock, although the dividend has not been increased this year. The payout ratio looks good, but unfortunately the company’s dividend record isn’t stellar. Given all of this, the dividend looks viable going forward, but investors should be aware that the company has pushed the boundaries of sustainability in the past and may do so again.
Companies with a stable dividend policy are likely to benefit from greater investor interest than those with a more inconsistent approach. At the same time, there are other factors that our readers should be aware of before investing any capital in a stock. For example, we have selected 1 warning sign for the Laurentian Bank of Canada that investors should consider. If you are a dividend investor, you can also view our curated list of high performing dividend stocks.
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