In This Article:
It looks like AGF Management Limited (TSE:AGF.B) is about to go ex-dividend in the next three days. Investors can purchase shares before the 9th of October in order to be eligible for this dividend, which will be paid on the 19th of October.
AGF Management's next dividend payment will be CA$0.08 per share. Last year, in total, the company distributed CA$0.32 to shareholders. Calculating the last year's worth of payments shows that AGF Management has a trailing yield of 5.3% on the current share price of CA$6.04. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether AGF Management can afford its dividend, and if the dividend could grow.
Check out our latest analysis for AGF Management
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately AGF Management's payout ratio is modest, at just 29% of profit.
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.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see AGF Management earnings per share are up 9.7% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. AGF Management has seen its dividend decline 11% per annum on average over the past 10 years, which is not great to see. AGF Management is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
The Bottom Line
From a dividend perspective, should investors buy or avoid AGF Management? AGF Management has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. AGF Management ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.