Investors who want to cash in on Centurion Corporation Limited’s (SGX:OU8) upcoming dividend of S$0.01 per share have only 2 days left to buy the shares before its ex-dividend date, 20 August 2018, in time for dividends payable on the 04 September 2018. Should you diversify into Centurion and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

See our latest analysis for Centurion

How I analyze a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it paying an annual yield above 75% of dividend payers?

• 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?

• Will the company be able to keep paying dividend based on the future earnings growth?

How does Centurion fare?

The current trailing twelve-month payout ratio for the stock is 52.62%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect OU8’s payout to fall to 45.46% of its earnings, which leads to a dividend yield of 5.17%. However, EPS should increase to SGD0.049, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

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. Unfortunately, it is really too early to view 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.

In terms of its peers, Centurion generates a yield of 4.60%, which is high for Real Estate stocks but still below the market’s top dividend payers.

Next Steps:

Taking all the above into account, Centurion is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three key factors you should further research:

1. 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.

2. 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.

3. 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.