Yahoo Finance Arvida Group Limited (NZSE:ARV) Looks Interesting, And It's About To Pay A Dividend
It looks like Arvida Group Limited (NZSE:ARV) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 9th of September in order to be eligible for this dividend, which will be paid on the 18th of September.
Arvida Group's next dividend payment will be NZ$0.015 per share. Last year, in total, the company distributed NZ$0.053 to shareholders. Calculating the last year's worth of payments shows that Arvida Group has a trailing yield of 3.9% on the current share price of NZ$1.38. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Arvida Group can afford its dividend, and if the dividend could grow.
See our latest analysis for Arvida Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Arvida Group's payout ratio is modest, at just 37% of profit. A useful secondary check can be to evaluate whether Arvida Group generated enough free cash flow to afford its dividend. Fortunately, it paid out only 37% of its free cash flow in the past year.
It's positive to see that Arvida Group'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.
Click here to see how much of its profit Arvida Group 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Arvida Group has grown its earnings rapidly, up 95% a year for the past five years. Arvida Group is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
We'd also point out that Arvida Group issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Arvida Group has delivered 51% dividend growth per year on average over the past 4 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
The Bottom Line
From a dividend perspective, should investors buy or avoid Arvida Group? Arvida Group 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. Arvida Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
Want to learn more about Arvida Group? Here's a visualisation of its historical rate of revenue and earnings growth.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
