AGF Management (TSE:AGF.B) Will Pay A Dividend Of CA$0.115

AGF Management Limited (TSE:AGF.B) will pay a dividend of CA$0.115 on the 16th of January. This means the annual payment is 4.4% of the current stock price, which is above the average for the industry.

See our latest analysis for AGF Management

AGF Management's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, AGF Management's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 12.1% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 36%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from CA$1.08 total annually to CA$0.46. Doing the maths, this is a decline of about 8.2% per year. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. It's encouraging to see that AGF Management has been growing its earnings per share at 21% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

AGF Management Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think AGF Management might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Just as an example, we've come across 3 warning signs for AGF Management you should be aware of, and 1 of them is a bit unpleasant. Is AGF Management not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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