It looks like American Financial Group, Inc. (NYSE: AFG) will go ex-dividend for the next four days. The ex-dividend day is one business day prior to a company’s record date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date as any trade in the stock must be done on or before the cutoff date. So, you can buy the shares of American Financial Group before October 14th to receive the dividend that the company will pay out on October 25th.
The company’s next dividend payment will be $ 0.56 per share, and for the past 12 months the company has paid a total of $ 2.00 per share. Based on last year’s payments, American Financial Group stock has a trailing yield of around 1.6% versus its current share price of $ 135.77. If you are buying this company for its dividend, you should have an idea of whether the American Financial Group’s dividend is reliable and sustainable. We have to see if the dividend is covered by profits and if it is growing.
Check out our latest analysis for the American Financial Group
Dividends are usually paid out of company earnings. So when a company pays out more than it earned, there is usually a higher risk of its dividend being cut. The American Financial Group only paid out 13% of its profits last year, which in our opinion is conservatively low and leaves plenty of scope for unexpected circumstances.
In general, the lower a company’s payout ratio, the more stable its dividend is.
Click here to view the company’s payout ratio, as well as analyst estimates for its future dividends.
NYSE: AFG Historic Dividend October 9, 2021
Have profits and dividends grown?
Companies with consistently growing earnings per share are generally the best dividend stocks because they usually find it easier to grow their dividend per share. Investors love dividends. So if earnings are going down and dividends are going down, expect a stock to sell heavily at the same time. It is encouraging to see that the American Financial Group has grown its profits 30% annually over the past five years.
Another important way to measure a company’s dividend prospects is by measuring its historical dividend growth rate. The American Financial Group has averaged 13% dividend growth per year for the past 10 years. It’s exciting to see that both earnings and dividends per share have soared over the past few years.
Does the American Financial Group have what it takes to keep dividend payments going? Typically, companies that grow rapidly and distribute a small portion of the profits keep the profits to be reinvested in the company. This strategy can create significant added value for shareholders in the long term – as long as it occurs without issuing too many new shares. Overall, the American Financial Group looks like a promising dividend stock on this analysis, and we think it is worth investigating further.
With that in mind, while American Financial Group has an attractive dividend, it’s worth knowing the risks associated with this stock. Our analysis shows 4 warning signs for American Financial Group which we strongly recommend before investing in the company.
If you are in the dividend stocks market, we recommend checking out our list of the top dividend stocks with a yield greater than 2% and an upcoming dividend.
This article from Simply Wall St is of a general nature. We only provide comments based on historical data and analyst projections using an unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
Do you have any feedback on this article? Concerned about the content? Get in touch directly with us. Alternatively, send an email to the editorial team (at) simplywallst.com.