Federal Agricultural Mortgage (NYSE:AGM) Is Paying Out A Larger Dividend Than Last Year
The board of Federal Agricultural Mortgage Corporation (NYSE:AGM) has announced that it will be paying its dividend of $1.40 on the 28th of March, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 3.1%, providing a nice boost to shareholder returns.
See our latest analysis for Federal Agricultural Mortgage
Federal Agricultural Mortgage's Dividend Is Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Federal Agricultural Mortgage's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 29.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 27%, which is in the range that makes us comfortable with the sustainability of the dividend.
Federal Agricultural Mortgage Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.48 in 2014 to the most recent total annual payment of $5.60. This implies that the company grew its distributions at a yearly rate of about 28% over that duration. 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. Federal Agricultural Mortgage has seen EPS rising for the last five years, at 12% per annum. Federal Agricultural Mortgage definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Federal Agricultural Mortgage's Dividend
Overall, a dividend increase is always good, and we think that Federal Agricultural Mortgage 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 in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Federal Agricultural Mortgage that investors need to be conscious of moving forward. 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.
