Is The Progressive Corporation (NYSE:PGR) An Attractive Dividend Stock?

Today we’ll take a closer look at The Progressive Corporation (NYSE:PGR) from a dividend investor’s perspective. Owning a strong business and reinvesting the dividends is widely seen as an attractive way of growing your wealth. Yet sometimes, investors buy a stock for its dividend and lose money because the share price falls by more than they earned in dividend payments. With a goodly-sized dividend yield despite a relatively short payment history, investors might be wondering if Progressive is a new dividend aristocrat in the making. We’d agree the yield does look enticing.

To summarise, shareholders should always check that Progressive’s dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. First, we think Progressive has an acceptable payout ratio and its dividend is well covered by cashflow. Next, earnings growth has been good, but unfortunately the dividend has been cut at least once in the past. Progressive has a number of positive attributes, but it falls slightly short of our (admittedly high) standards. Were there evidence of a strong moat or an attractive valuation, it could still be well worth a look.

Source: Simply Wall St.

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