Assessing the Sustainability and Growth of Great-West Lifeco Inc's Dividends
Great-West Lifeco Inc (GWLIF, Financial) recently announced a dividend of $0.56 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-02-28. 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 look into Great-West Lifeco Inc's dividend performance and assess its sustainability.
What Does Great-West Lifeco Inc Do?
Great-West Lifeco provides life insurance, health insurance, retirement products, asset management, recordkeeping services, and reinsurance products in Canada, the United States, and Europe. The Canada business contributes approximately 35% of adjusted earnings and has leading market positions in group insurance, group retirement, and individual insurance. The company operates the second-largest recordkeeping business under the Empower brand in the United States, with an earnings contribution from the country approximating 20%. Great-West Lifeco also offers various products across European markets with a strong presence in the U.K., Ireland, and Germany. The Europe segment contributes around 28% of adjusted earnings and the reinsurance business accounts for around 17% of adjusted earnings.
A Glimpse at Great-West Lifeco Inc's Dividend History
Great-West Lifeco Inc has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis.
Great-West Lifeco Inc has increased its dividend each year since 2005. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 19 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Great-West Lifeco Inc's Dividend Yield and Growth
As of today, Great-West Lifeco Inc currently has a 12-month trailing dividend yield of 4.99% and a 12-month forward dividend yield of 5.25%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Great-West Lifeco Inc's annual dividend growth rate was 5.90%. Extended to a five-year horizon, this rate stayed the same. And over the past decade, Great-West Lifeco Inc's annual dividends per share growth rate stands at 5.70%.
Based on Great-West Lifeco Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Great-West Lifeco Inc stock as of today is approximately 6.65%.
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 2023-12-31, Great-West Lifeco Inc's dividend payout ratio is 0.68.
Great-West Lifeco Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Great-West Lifeco Inc's profitability 5 out of 10 as of 2023-12-31, 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. Great-West Lifeco Inc'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 Great-West Lifeco Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Great-West Lifeco Inc's revenue has increased by approximately -25.40% per year on average, a rate that underperforms than approximately 94.95% 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, Great-West Lifeco Inc's earnings increased by approximately -1.10% per year on average, a rate that underperforms than approximately 59.89% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.70%, which underperforms than approximately 53.24% of global competitors.
Next Steps
In conclusion, Great-West Lifeco Inc's history of consistent dividend payments and growth is commendable, especially as a dividend achiever. The forward-looking dividend yield indicates investor confidence in the company's ability to continue its dividend growth. However, the sustainability of these dividends is contingent upon the company's profitability, payout ratio, and growth metrics. While Great-West Lifeco Inc's profitability rank is fair, its growth metrics suggest areas for improvement. Investors must weigh these factors when considering the long-term viability of Great-West Lifeco Inc's dividends. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for informed investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
