OneMain Holdings, Inc. (NYSE:OMF) stock is about to trade ex-dividend in 4 days. You will need to purchase shares before the 7th of August to receive the dividend, which will be paid on the 18th of August.
OneMain Holdings's upcoming dividend is US$2.33 a share, following on from the last 12 months, when the company distributed a total of US$5.82 per share to shareholders. Based on the last year's worth of payments, OneMain Holdings has a trailing yield of 4.6% on the current stock price of $28.7. If you buy this business for its dividend, you should have an idea of whether OneMain Holdings's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. OneMain Holdings has a low and conservative payout ratio of just 25% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at OneMain Holdings, with earnings per share up 2.9% on average over the last five years.
Unfortunately OneMain Holdings has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
Should investors buy OneMain Holdings for the upcoming dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating OneMain Holdings more closely.
In light of that, while OneMain Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 3 warning signs for OneMain Holdings (1 is concerning) you should be aware of.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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