Is Buying Olin Corporation (NYSE:OLN) For Its Upcoming $0.2 Dividend A Good Choice?
Shares of Olin Corporation (NYSE:OLN) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.2 per share, investors must have owned the shares prior to 09 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Olin can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Olin
5 checks you should use to assess 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 paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Can it afford 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 does Olin fare?
The current trailing twelve-month payout ratio for the stock is 23.93%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect OLN’s payout to increase to 31.75% of its earnings, which leads to a dividend yield of around 2.55%. However, EPS is forecasted to fall to $2.18 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. The reality facing OLN investors is that whilst it has continued to pay shareholders dividend, there has not been any increase in the level of dividends paid in the past decade. However, income investors that value stability over growth may still find OLN appealing. Relative to peers, Olin has a yield of 2.53%, which is high for Chemicals stocks but still below the market’s top dividend payers.
Next Steps:
With this in mind, I definitely rank Olin as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three fundamental aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for OLN’s future growth? Take a look at our free research report of analyst consensus for OLN’s outlook.
Valuation: What is OLN 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 OLN is currently mispriced by the market.
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.
