Argentex Group (LON:AGFX) Is Due To Pay A Dividend Of UK£0.013

Argentex Group Plc (LON:AGFX) will pay a dividend of UK£0.013 on the 26th of September. Including this payment, the dividend yield on the stock will be 2.6%, which is a modest boost for shareholders' returns.

View our latest analysis for Argentex Group

Argentex Group's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Argentex Group's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 25.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

Argentex Group's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. There hasn't been much of a change in the dividend over the last 2. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Argentex Group has seen EPS grow by 25% in 12 months. This is a good sign, and could set the company up to be a solid dividend payer in the future if it continues. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

We Really Like Argentex Group's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Argentex Group that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.