Should You Buy United Overseas Insurance Limited (SGX:U13) For Its Upcoming Dividend?
United Overseas Insurance Limited (SGX:U13) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase United Overseas Insurance's shares before the 18th of August in order to be eligible for the dividend, which will be paid on the 31st of August.
The company's upcoming dividend is S$0.0907 a share, following on from the last 12 months, when the company distributed a total of S$0.26 per share to shareholders. Calculating the last year's worth of payments shows that United Overseas Insurance has a trailing yield of 3.0% on the current share price of S$8.81. If you buy this business for its dividend, you should have an idea of whether United Overseas Insurance's dividend is reliable and sustainable. 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 usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see United Overseas Insurance paying out a modest 32% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
View our latest analysis for United Overseas Insurance
Click here to see how much of its profit United Overseas Insurance paid out over the last 12 months.
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. With that in mind, we're encouraged by the steady growth at United Overseas Insurance, with earnings per share up 7.6% on average over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. United Overseas Insurance has delivered an average of 4.5% per year annual increase in its dividend, based on the past 10 years of dividend payments. 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 worth buying for its dividend? 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.
In light of that, while United Overseas Insurance has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 1 warning sign for United Overseas Insurance you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.