Shares of Argo Investments (ASX:ARG) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.16 per share, investors must have owned the shares prior to Fri 25 Aug 2017, which is the last day the company’s management will finalize its roster of shareholders to whom it will mail dividend payments. Should dividend investors care? Today I’m going to investigate the latest data and discuss some metrics you shouldn’t overlook.
What is the ex-dividend date?
If you purchase a stock on or after its ex-dividend date, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.
View our latest analysis for Argo Investments
Should Argo Investments (ARG) be part of your dividend portfolio?
The first thing I always check after looking at a company’s dividend yield is the payout ratio.
Payout ratio is a measure of how much of a company’s earnings are paid out as dividends to its shareholders. So a payout ratio of 50% would mean for every $1 earnt they pay 50c as a dividend. Likewise a payout ratio of 150% means a company cannot afford to pay their dividend with earnings and will need to dive into their cash reserves or worse debt to pay the remaining part.
The company currently pays out 80% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. Analysts have not forecast a dividends per share estimate for 3 years time, which makes it hard to determine what yield shareholders should expect to see in the future.
Check out our latest analysis for Argo Investments
On top of Argo Investments’s payout ratio, investors should also look at the company’s track-record of dividend payments over the years.
If there’s one type of stock you want to be reliable, it’s dividend stocks. They have also been paying out consistently during this time, as one would expect if dividends were increasing.
The company’s dividend yield is currently 3.84%, which is high for a financial institutions stock but still below the market’s top dividend payers.
The Take Away
If you are building an income portfolio, then Argo Investments is a complicated choice, although it has some positive aspects.But if you are not exclusively a dividend investor, ARG could still be an interesting investment opportunity.
See our latest analysis (it’s FREE) to explore what investment opportunities Argo Investments may offer. If you are looking for great dividend payers I recommend you also take a look at our list of Dividend Rock Stars.
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