Orion Engineered Carbons SA (NYSE:OEC): 4 Days To Buy Before The Ex-Dividend Date
Have you been keeping an eye on Orion Engineered Carbons SA’s (NYSE:OEC) upcoming dividend of US$0.20 per share payable on the 28 September 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 19 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Orion Engineered Carbons’s latest financial data to analyse its dividend characteristics.
Check out our latest analysis for Orion Engineered Carbons
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:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will it be able to continue to payout at the current rate in the future?
How well does Orion Engineered Carbons fit our criteria?
The company currently pays out 58.9% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 32.6%, leading to a dividend yield of 2.6%. However, EPS should increase to $2.1, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Orion Engineered Carbons as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Orion Engineered Carbons produces a yield of 2.5%, which is high for Chemicals stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Orion Engineered Carbons from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 relevant factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for OEC’s future growth? Take a look at our free research report of analyst consensus for OEC’s outlook.
Valuation: What is OEC 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 OEC 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.
