Retail Opportunity Investments Corp (NASDAQ:ROIC): Ex-Dividend Is In 3 Days, Should You Buy?
On the 28 June 2018, Retail Opportunity Investments Corp (NASDAQ:ROIC) will be paying shareholders an upcoming dividend amount of $0.2 per share. However, investors must have bought the company’s stock before 13 June 2018 in order to qualify for the payment. That means you have only 3 days left! Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Retail Opportunity Investments’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Retail Opportunity Investments
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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 dividend per share amount increased 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?
Does Retail Opportunity Investments pass our checks?
Although REITs are expected to payout a high portion of the earnings, Retail Opportunity Investments currently pays out more than double its net income, which suggests that the dividend is not well-covered by earnings by any means. Furthermore, analysts are forecasting the payout ratio to remain at this high level going forward, leading to a future of uncertainty around the stability of ROIC’s 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 is that it is too early to consider Retail Opportunity Investments as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Retail Opportunity Investments generates a yield of 4.24%, which is on the low-side for REITs stocks.
Next Steps:
After digging a little deeper into Retail Opportunity Investments’s yield, it’s easy to see why you should be cautious investing in the company just 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. I’ve put together three key aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for ROIC’s future growth? Take a look at our free research report of analyst consensus for ROIC’s outlook.
Valuation: What is ROIC 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 ROIC 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 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.
