Yahoo Finance AGCO (NYSE:AGCO) Has Announced A Dividend Of $0.29
AGCO Corporation (NYSE:AGCO) will pay a dividend of $0.29 on the 14th of June. This makes the dividend yield 5.3%, which will augment investor returns quite nicely.
Check out our latest analysis for AGCO
AGCO's Earnings Easily Cover The Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much. But before making this announcement, AGCO's earnings quite easily covered the dividend. The business is earning enough to make the dividend feasible, but the cash payout ratio of 79% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.
EPS is set to fall by 12.3% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 9.2%, which is comfortable for the company to continue in the future.
AGCO Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was $0.40, compared to the most recent full-year payment of $6.16. This works out to be a compound annual growth rate (CAGR) of approximately 31% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that AGCO has been growing its earnings per share at 34% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. On the plus side, the dividend looks sustainable by most measures but it is let down by the lack of cash flows. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for AGCO that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
