Are You An Income Investor? Don’t Miss Out On Oversea-Chinese Banking Corporation Limited (SGX:O39)

Oversea-Chinese Banking Corporation Limited (SGX:O39) has pleased shareholders over the past 10 years, paying out an average dividend of 4.00% annually. The company is currently worth S$50.77b, and now yields roughly 3.20%. Does Oversea-Chinese Banking tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Oversea-Chinese Banking

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

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

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share risen in the past couple of years?

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

• Will it be able to continue to payout at the current rate in the future?

SGX:O39 Historical Dividend Yield June 21st 18

How well does Oversea-Chinese Banking fit our criteria?

Oversea-Chinese Banking has a trailing twelve-month payout ratio of 35.74%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 40.61%, leading to a dividend yield of 3.93%. Furthermore, EPS should increase to SGD1.16. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of O39 it has increased its DPS from SGD0.28 to SGD0.38 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.

In terms of its peers, Oversea-Chinese Banking produces a yield of 3.20%, which is on the low-side for Banks stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Oversea-Chinese Banking as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three relevant aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for O39’s future growth? Take a look at our free research report of analyst consensus for O39’s outlook.

2. Valuation: What is O39 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 O39 is currently mispriced by the market.

3. Other 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.