We Wouldn't Be Too Quick To Buy Argo Group International Holdings, Ltd. (NYSE:ARGO) Before It Goes Ex-Dividend
It looks like Argo Group International Holdings, Ltd. (NYSE:ARGO) is about to go ex-dividend in the next four days. This means that investors who purchase shares on or after the 19th of November will not receive the dividend, which will be paid on the 4th of December.
Argo Group International Holdings's upcoming dividend is US$0.31 a share, following on from the last 12 months, when the company distributed a total of US$1.24 per share to shareholders. Last year's total dividend payments show that Argo Group International Holdings has a trailing yield of 3.0% on the current share price of $40.88. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Argo Group International Holdings can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Argo Group International Holdings
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Argo Group International Holdings lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Argo Group International Holdings was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Argo Group International Holdings has lifted its dividend by approximately 15% a year on average.
Remember, you can always get a snapshot of Argo Group International Holdings's financial health, by checking our visualisation of its financial health, here.
Final Takeaway
Is Argo Group International Holdings an attractive dividend stock, or better left on the shelf? It's hard to get past the idea of Argo Group International Holdings paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.
With that being said, if you're still considering Argo Group International Holdings as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 1 warning sign for Argo Group International Holdings that you should be aware of before investing in their shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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