Canadian Dividend Investors
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Dividend Safety
...what you really must know, and all you really must know
is what's happening to the dividend:
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Lowell Miller
Lowell Miller was the President and lead portfolio manager of Miller/Howard Investments Inc. and was a professional money manager for over thirty years. To minimize the risk that the dividend could be cut or discontinued, Miller suggests we consider four questions as outlined below. Your answers to these questions will govern your decision as to whether or not you want to buy some common shares of a company, and whether you want to continue to hold the company in your portfolio.
1) Is the dividend in jeopardy?
As a general rule the total annual dividend paid by the company should always be less than the annual earnings., as illustrated below for Sun Life Financial. The historic dividend payments and earnings for Sun Life are highlighted below on the Value Line report dated May 3, 2024. By inspection, it is apparent that in every year since 2012, the company's earnings are greater than the dividend payments.
2) Has the company changed its dividend policy?
No, the data shows us that since 2015, company management is contining to take steps to continue to increase the dividend payments each year.
3) Has the company failed to raise its dividend?
No, Value Line report shows that the company has raised its dividend every year since 2015.
4) Has the company cut its dividend?
The Value Line data shows that the company had not cut its dividend since 2008 although it did not begin to increase the dividend until 2015.
Based on foregoing information, it is reasonable to conclude that Sun Life Financial dividends are unlikely to be cut or discontinued, at least in the foreseeable future. However, it will be important to monitor the quarterly and annual reports for the company on an ongoing basis, to confirm that the company's financial success can be expected to continue.
1. Lowell, L. 2006. The Single Best Investment, Creating Wealth with Dividend Growth. The Print Project, P.O. Box 703, Bearsville, NY 12409, 2nd Ed., p.160