Yahoo Finance There's A Lot To Like About The Progressive Corporation's (NYSE:PGR) Upcoming US$0.10 Dividend
The Progressive Corporation (NYSE:PGR) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 6th of April, you won't be eligible to receive this dividend, when it is paid on the 15th of April.
Progressive's next dividend payment will be US$0.10 per share, on the back of last year when the company paid a total of US$2.65 to shareholders. Based on the last year's worth of payments, Progressive has a trailing yield of 3.6% on the current stock price of $73.84. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Progressive
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Progressive paid out a comfortable 39% of its profit last year.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Progressive's earnings have been skyrocketing, up 26% per annum for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Progressive has delivered an average of 32% per year annual increase in its dividend, based on the past ten years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Is Progressive an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, Progressive looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in Progressive for the dividends alone, you should always be mindful of the risks involved. Be aware that Progressive is showing 2 warning signs in our investment analysis, and 1 of those shouldn't be ignored...
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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. Thank you for reading.
