Yahoo Finance Is Argan Inc (NYSE:AGX) A Smart Pick For Income Investors?
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Argan Inc (NYSE:AGX) has returned to shareholders over the past 6 years, an average dividend yield of 2.00% annually. Should it have a place in your portfolio? Let’s take a look at Argan in more detail. Check out our latest analysis for Argan
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has the amount of dividend per share grown over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Argan fit our criteria?
The company currently pays out 34.57% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect AGX’s payout to remain around the same level at 33.26% of its earnings, which leads to a dividend yield of around 2.80%. Furthermore, EPS is forecasted to fall to $1.73 in the upcoming year. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Argan as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Argan generates a yield of 2.80%, which is high for Construction stocks but still below the market’s top dividend payers.
Next Steps:
If Argan is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three pertinent aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for AGX’s future growth? Take a look at our free research report of analyst consensus for AGX’s outlook.
Valuation: What is AGX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AGX is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
