Read This Before Buying Arrow Global Group PLC (LON:ARW) For Its Upcoming UK£0.04 Dividend

Shares of Arrow Global Group PLC (LON:ARW) will begin trading ex-dividend in 2 days. To qualify for the dividend check of UK£0.04 per share, investors must have owned the shares prior to 06 September 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into Arrow Global Group and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

View our latest analysis for Arrow Global Group

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is their annual yield among the top 25% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

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

• Does earnings amply cover its dividend payments?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

LSE:ARW Historical Dividend Yield September 3rd 18

Does Arrow Global Group pass our checks?

The current trailing twelve-month payout ratio for the stock is 47.4%, which means that the dividend is covered by earnings. However, going forward, analysts expect ARW’s payout to fall to 34.6% of its earnings, which leads to a dividend yield of 6.4%. However, EPS should increase to £0.37, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. 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 generates a yield of 4.8%, which is high for Consumer Finance stocks.

Next Steps:

Taking into account the dividend metrics, Arrow Global Group ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental factors you should further research:

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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.