Is Buying Arrow Global Group PLC (LON:ARW) For Its Upcoming £0.08 Dividend A Good Choice?

Have you been keeping an eye on Arrow Global Group PLC’s (LSE:ARW) upcoming dividend of £0.08 per share payable on the 06 July 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 31 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Arrow Global Group’s latest financial data to analyse its dividend characteristics. See our latest analysis for Arrow Global Group

How I analyze a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it the top 25% annual dividend yield payer?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Does earnings amply cover its dividend payments?

• Will the company be able to keep paying dividend based on the future earnings growth?

LSE:ARW Historical Dividend Yield May 27th 18

How well does Arrow Global Group fit our criteria?

The current trailing twelve-month payout ratio for the stock is 49.53%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 34.60%, leading to a dividend yield of around 5.60%. However, EPS should increase to £0.28, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Arrow Global Group as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Arrow Global Group has a yield of 4.06%, which is on the low-side for Consumer Finance stocks.

Next Steps:

With this in mind, I definitely rank Arrow Global Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for ARW’s future growth? Take a look at our free research report of analyst consensus for ARW’s outlook.

2. Valuation: What is ARW worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ARW is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.