Read This Before Buying Ag Growth International Inc (TSE:AFN) For Its Upcoming $0.2 Dividend

Have you been keeping an eye on Ag Growth International Inc's (TSX:AFN) upcoming dividend of CA$0.2 per share payable on the 15 May 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 27 April 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at Ag Growth International's most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Ag Growth International

5 checks you should use to assess a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is its annual yield among the top 25% of dividend-paying companies?
• Has it paid dividend every year without dramatically reducing payout in the past?
• Has dividend per share amount increased over the past?
• Is its earnings sufficient to payout dividend at the current rate?
• Will the company be able to keep paying dividend based on the future earnings growth?

Does Ag Growth International pass our checks?

Ag Growth International has a trailing twelve-month payout ratio of 108.77%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect AFN's payout to fall into a more sustainable range of 62.51% of its earnings, which leads to a dividend yield of around 4.55%. Moreover, EPS should increase to CA$2.91, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of AFN it has increased its DPS from CA$1.68 to CA$2.4 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Ag Growth International generates a yield of 4.55%, which is high for Machinery stocks but still below the market's top dividend payers.

Next Steps:

Considering the dividend attributes we analyzed above, Ag Growth International is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. I've put together three relevant factors you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for AFN’s future growth? Take a look at our free research report of analyst consensus for AFN’s outlook.
2. Valuation: What is AFN 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 AFN is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.