OFG Bancorp (NYSE:OFG) Is Increasing Its Dividend To $0.25
OFG Bancorp (NYSE:OFG) will increase its dividend on the 15th of April to $0.25, which is 14% higher than last year's payment from the same period of $0.22. This takes the annual payment to 2.4% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for OFG Bancorp
OFG Bancorp's Payment Expected To Have Solid Earnings Coverage
If it is predictable over a long period, even low dividend yields can be attractive.
Having distributed dividends for at least 10 years, OFG Bancorp has a long history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 23% also shows that OFG Bancorp is able to comfortably pay dividends.
The next 3 years are set to see EPS grow by 3.7%. Analysts estimate the future payout ratio will be 23% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $0.24 in 2014 to the most recent total annual payment of $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that OFG Bancorp has been growing its earnings per share at 19% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for OFG Bancorp's prospects of growing its dividend payments in the future.
OFG Bancorp Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for OFG Bancorp that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
