Investors who want to cash in on Olam International Limited’s (SGX:O32) upcoming dividend of S$0.035 per share have only 1 days left to buy the shares before its ex-dividend date, 20 August 2018, in time for dividends payable on the 31 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Olam International’s latest financial data to analyse its dividend characteristics.

View our latest analysis for Olam International

5 checks you should use to assess a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

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

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has it increased its dividend per share amount 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 Olam International pass our checks?

The company currently pays out 47.04% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 36.81%, leading to a dividend yield of around 2.72%. However, EPS should increase to SGD0.16, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.

Compared to its peers, Olam International generates a yield of 3.72%, which is high for Consumer Retailing stocks but still below the market’s top dividend payers.

Next Steps:

Taking into account the dividend metrics, Olam International ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. I’ve put together three fundamental factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for O32’s future growth? Take a look at our free research report of analyst consensus for O32’s outlook.

2. Valuation: What is O32 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 O32 is currently mispriced by the market.

3. Other 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.