AGC (TSE:5201) Will Pay A Dividend Of ¥105.00
The board of AGC Inc. (TSE:5201) has announced that it will pay a dividend of ¥105.00 per share on the 8th of September. This makes the dividend yield 4.9%, which will augment investor returns quite nicely.
AGC's Distributions May Be Difficult To Sustain
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. AGC isn't generating any profits, and it is paying out a very high proportion of the cash it is earning. This makes us feel that the dividend will be hard to maintain.
Looking forward, earnings per share is forecast to rise by 47.5% over the next year. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. Unless this can be done in short order, the dividend might be difficult to sustain.
Check out our latest analysis for AGC
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from ¥90.00 total annually to ¥210.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.8% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. AGC might have put its house in order since then, but we remain cautious.
Dividend Growth Potential Is Shaky
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. AGC's earnings per share has shrunk at 46% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
We're Not Big Fans Of AGC's Dividend
Overall, while some might be pleased that the dividend wasn't cut, we think this may help AGC make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. The dividend doesn't inspire confidence that it will provide solid income in the future.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for AGC that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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