There are two things I look for in a dividend-paying company. The first is whether or not that dividend is safe at the present time. Once I know that it’s secure, I then ask if I’m going to grow my earnings with this stock. We’re investors; therefore, we want to see an increased return on investment. For dividend investors, that means we want to see the dividend grow.
One company that has historically done very well with dividend growth is Agrium Inc. (TSX:AGU)(NYSE:AGU). Presently, it pays a 4.04% yield, which nets investors about $1.14 per share, per quarter. The payout ratio for this is 48.38%, which is much higher than other companies in the same industry. Here’s what’s incredible … If you’d owned this stock five years ago, you only got a payout ratio of 5%. That means the dividend has had a compound annual growth rate of 77.3%.
But the past does not always dictate the future. Can Agrium continue to grow its dividend? To answer that, let’s analyze the company in a bit more detail...
Source: The Motley Fool