It looks like United Overseas Insurance Limited (SGX:U13) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 13th of August in order to be eligible for this dividend, which will be paid on the 23rd of August.
United Overseas Insurance's next dividend payment will be S$0.085 per share. Last year, in total, the company distributed S$0.22 to shareholders. Last year's total dividend payments show that United Overseas Insurance has a trailing yield of 3.1% on the current share price of SGD7.15. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether United Overseas Insurance has been able to grow its dividends, or if the dividend might be cut.
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. United Overseas Insurance paid out a comfortable 32% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see United Overseas Insurance earnings per share are up 3.2% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, United Overseas Insurance has lifted its dividend by approximately 3.9% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is United Overseas Insurance an attractive dividend stock, or better left on the shelf? United Overseas Insurance has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, United Overseas Insurance appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Curious about whether United Overseas Insurance has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.