Interested In Great-West Lifeco's (TSE:GWO) Upcoming CA$0.44 Dividend? You Have Four Days Left

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Great-West Lifeco Inc. (TSE:GWO) is about to go ex-dividend in just 4 days. Ex-dividend means that investors that purchase the stock on or after the 2nd of December will not receive this dividend, which will be paid on the 31st of December.

Great-West Lifeco's next dividend payment will be CA$0.44 per share, on the back of last year when the company paid a total of CA$1.75 to shareholders. Last year's total dividend payments show that Great-West Lifeco has a trailing yield of 5.7% on the current share price of CA$30.88. If you buy this business for its dividend, you should have an idea of whether Great-West Lifeco's dividend is reliable and sustainable. So we need to investigate whether Great-West Lifeco can afford its dividend, and if the dividend could grow.

View our latest analysis for Great-West Lifeco

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. Great-West Lifeco paid out more than half (63%) of its earnings last year, which is a regular payout ratio for most companies.

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.

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

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Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Great-West Lifeco's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Great-West Lifeco has increased its dividend at approximately 3.6% a year on average.

Final Takeaway

Is Great-West Lifeco an attractive dividend stock, or better left on the shelf? Great-West Lifeco has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

However if you're still interested in Great-West Lifeco as a potential investment, you should definitely consider some of the risks involved with Great-West Lifeco. For example - Great-West Lifeco has 1 warning sign we think you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

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