Unveiling the Dividend History, Yield, and Growth of Power Corporation of Canada
Power Corporation of Canada(PWCDF, Financial) recently announced a dividend of $0.53 per share, payable on 2023-11-01, with the ex-dividend date set for 2023-09-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Power Corporation of Canada's dividend performance and assess its sustainability.
What Does Power Corporation of Canada Do?
Incorporated in 1925, Power Corporation of Canada is a holding company with controlling interests in Great-West Life (an insurance conglomerate), IGM Financial (Canada's largest nonbank asset manager), and other alternative asset-management platforms (Sagard and Power Sustainable). The company also has minority interests in Groupe Bruxelles Lambert (a holding company with interests in European companies) and ChinaAMC (an asset manager in China).
A Glimpse at Power Corporation of Canada's Dividend History
Power Corporation of Canada has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Power Corporation of Canada's Dividend Yield and Growth
As of today, Power Corporation of Canada currently has a 12-month trailing dividend yield of 5.76% and a 12-month forward dividend yield of 5.92%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Power Corporation of Canada's annual dividend growth rate was 7.40%. Extended to a five-year horizon, this rate increased to 7.80% per year. And over the past decade, Power Corporation of Canada's annual dividends per share growth rate stands at 6.70%.
Based on Power Corporation of Canada's dividend yield and five-year growth rate, the 5-year yield on cost of Power Corporation of Canada stock as of today is approximately 8.39%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Power Corporation of Canada's dividend payout ratio is 1.03, suggesting that the company's dividend may not be sustainable.
Power Corporation of Canada's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Power Corporation of Canada's profitability 5 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Power Corporation of Canada's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Power Corporation of Canada's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Power Corporation of Canada's revenue has increased by approximately -13.40% per year on average, a rate that underperforms than approximately 90.65% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Power Corporation of Canada's earnings increased by approximately 3.40% per year on average, a rate that underperforms than approximately 48.24% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which underperforms than approximately 54.17% of global competitors.
Next Steps
In conclusion, while Power Corporation of Canada has a consistent history of dividend payments and a promising dividend yield, its high payout ratio and underperformance in growth metrics raise concerns about the sustainability of its dividends. Investors should consider these factors alongside their personal investment goals and risk tolerance before making a decision. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
