Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past 7 years Centurion Corporation Limited (SGX:OU8) has returned an average of 239.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Centurion should have a place in your portfolio. View our latest analysis for Centurion

Here’s how I find good dividend stocks

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it the top 25% annual dividend yield payer?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share risen in the past couple of years?

• Is its earnings sufficient to payout dividend at the current rate?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does Centurion fare?

Centurion has a trailing twelve-month payout ratio of 47.97%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 44.56%, leading to a dividend yield of 4.57%. Moreover, EPS should increase to SGD0.05. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Centurion as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Centurion generates a yield of 4.00%, which is high for Real Estate stocks but still below the market’s top dividend payers.

Next Steps:

If you are building an income portfolio, then Centurion is a complicated choice since it has some positive aspects as well as negative ones. 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, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent aspects you should look at:

• Future Outlook: What are well-informed industry analysts predicting for OU8’s future growth? Take a look at our free research report of analyst consensus for OU8’s outlook.

• Valuation: What is OU8 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 OU8 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.