Should You Buy Oxley Holdings Limited (SGX:5UX) For Its Dividend?

Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past 7 years Oxley Holdings Limited (SGX:5UX) has returned an average of 2.00% per year to investors in the form of dividend payouts. Does Oxley Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Oxley Holdings

How I analyze a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is their annual yield among the top 25% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

SGX:5UX Historical Dividend Yield June 25th 18

Does Oxley Holdings pass our checks?

The current trailing twelve-month payout ratio for the stock is 23.20%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect 5UX’s payout to fall to 20.79% of its earnings, which leads to a dividend yield of around 3.10%. However, EPS should increase to SGD0.052, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view Oxley Holdings as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Oxley Holdings produces a yield of 2.71%, which is on the low-side for Real Estate stocks.

Next Steps:

If Oxley Holdings is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three pertinent aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 5UX’s future growth? Take a look at our free research report of analyst consensus for 5UX’s outlook.

2. Valuation: What is 5UX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 5UX is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.