Is Buying OFG Bancorp (NYSE:OFG) For Its Upcoming US$0.06 Dividend A Good Choice?
On the 16 July 2018, OFG Bancorp (NYSE:OFG) will be paying shareholders an upcoming dividend amount of US$0.06 per share. However, investors must have bought the company’s stock before 28 June 2018 in order to qualify for the payment. That means you have only 2 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine OFG Bancorp’s latest financial data to analyse its dividend characteristics. View out our latest analysis for OFG Bancorp
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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 risen in the past couple of years?
Is is able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does OFG Bancorp fit our criteria?
OFG Bancorp has a trailing twelve-month payout ratio of 26.01%, which means that the dividend is covered by earnings. However, going forward, analysts expect OFG’s payout to fall to 22.33% of its earnings, which leads to a dividend yield of 1.92%. However, EPS should increase to $1.17, 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. Not only have dividend payouts from OFG Bancorp fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, OFG Bancorp produces a yield of 1.70%, which is on the low-side for Banks stocks.
Next Steps:
Whilst there are few things you may like about OFG Bancorp from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for OFG’s future growth? Take a look at our free research report of analyst consensus for OFG’s outlook.
Historical Performance: What has OFG’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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.
