Overseas Shipholding Group, Inc. (NYSE:OSG) Passed Our Checks, And It's About To Pay A US$0.06 Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Overseas Shipholding Group, Inc. (NYSE:OSG) is about to go ex-dividend in just 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Overseas Shipholding Group's shares before the 27th of March in order to receive the dividend, which the company will pay on the 11th of April.
The company's upcoming dividend is US$0.06 a share, following on from the last 12 months, when the company distributed a total of US$0.06 per share to shareholders. Last year's total dividend payments show that Overseas Shipholding Group has a trailing yield of 3.8% on the current share price of US$6.29. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Overseas Shipholding Group has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Overseas Shipholding Group
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Overseas Shipholding Group paid out just 7.5% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Click here to see how much of its profit Overseas Shipholding Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Overseas Shipholding Group has grown its earnings rapidly, up 42% a year for the past five years. Overseas Shipholding Group looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Overseas Shipholding Group's dividend payments per share have declined at 23% per year on average over the past eight years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
To Sum It Up
Should investors buy Overseas Shipholding Group for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Overseas Shipholding Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
On that note, you'll want to research what risks Overseas Shipholding Group is facing. Our analysis shows 3 warning signs for Overseas Shipholding Group and you should be aware of them before buying any shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
