Arthur J. Gallagher's (NYSE:AJG) Upcoming Dividend Will Be Larger Than Last Year's
Arthur J. Gallagher & Co.'s (NYSE:AJG) periodic dividend will be increasing on the 15th of March to $0.60, with investors receiving 9.1% more than last year's $0.55. This takes the annual payment to 0.9% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Arthur J. Gallagher
Arthur J. Gallagher's Dividend Is Well Covered By Earnings
Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Arthur J. Gallagher's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 122.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.
Arthur J. Gallagher Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $1.40 in 2014, and the most recent fiscal year payment was $2.20. This implies that the company grew its distributions at a yearly rate of about 4.6% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
We Could See Arthur J. Gallagher's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Arthur J. Gallagher has seen EPS rising for the last five years, at 5.2% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
Arthur J. Gallagher Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Arthur J. Gallagher is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 4 warning signs for Arthur J. Gallagher 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.
