ARGO GRAPHICS Inc. (TSE:7595) Passed Our Checks, And It's About To Pay A JP¥50.00 Dividend

ARGO GRAPHICS Inc. (TSE:7595) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase ARGO GRAPHICS' shares before the 28th of March to receive the dividend, which will be paid on the 23rd of June.

The company's next dividend payment will be JP¥50.00 per share, on the back of last year when the company paid a total of JP¥100.00 to shareholders. Last year's total dividend payments show that ARGO GRAPHICS has a trailing yield of 1.9% on the current share price of JP¥5160.00. If you buy this business for its dividend, you should have an idea of whether ARGO GRAPHICS's dividend is reliable and sustainable. As a result, readers should always check whether ARGO GRAPHICS has been able to grow its dividends, or if the dividend might be cut.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. ARGO GRAPHICS is paying out just 15% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether ARGO GRAPHICS generated enough free cash flow to afford its dividend. The good news is it paid out just 22% of its free cash flow in the last year.

It's positive to see that ARGO GRAPHICS's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

View our latest analysis for ARGO GRAPHICS

Click here to see how much of its profit ARGO GRAPHICS paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see ARGO GRAPHICS's earnings per share have risen 15% per annum over the last five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, ARGO GRAPHICS has lifted its dividend by approximately 13% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

From a dividend perspective, should investors buy or avoid ARGO GRAPHICS? ARGO GRAPHICS has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. ARGO GRAPHICS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Want to learn more about ARGO GRAPHICS's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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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.