Consider This Before Buying OFG Bancorp (NYSE:OFG) For The 1.46% 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. Over the past 10 years, OFG Bancorp (NYSE:OFG) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether OFG Bancorp should have a place in your portfolio.
See our latest analysis for OFG Bancorp
5 checks you should use to assess 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?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has the amount of dividend per share grown over the past?
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?
How well does OFG Bancorp fit our criteria?
OFG Bancorp has a trailing twelve-month payout ratio of 24.48%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 17.46%, leading to a dividend yield of around 1.62%. However, EPS should increase to $1.43, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from OFG Bancorp have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, OFG Bancorp has a yield of 1.46%, which is on the low-side for Banks stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in OFG Bancorp for the dividend. 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important factors 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.
Valuation: What is OFG 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 OFG is currently mispriced by the market.
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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
