The board of OSB Group Plc (LON:OSB) has announced that it will be increasing its dividend by 78% on the 21st of September to £0.087, up from last year's comparable payment of £0.049. This takes the annual payment to 4.4% of the current stock price, which is about average for the industry.
Check out our latest analysis for OSB Group
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
OSB Group has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but OSB Group's payout ratio of 35% is a good sign for current shareholders as this means that earnings decently cover dividends.
The next 3 years are set to see EPS grow by 31.4%. Analysts forecast the future payout ratio could be 39% over the same time horizon, which is a number we think the company can maintain.
It's comforting to see that OSB Group has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 7 years was £0.039 in 2015, and the most recent fiscal year payment was £0.26. This means that it has been growing its distributions at 31% per annum over that time. OSB Group has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. OSB Group has seen EPS rising for the last five years, at 15% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, OSB Group has 2 warning signs (and 1 which is concerning) we think you should know about. Is OSB Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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OSB Group Plc, through its subsidiaries, operates as a specialist lending and retail savings company in the United Kingdom and the Channel Islands.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
Read more about these checks in the individual report sections or in our analysis model.
Very undervalued with adequate balance sheet and pays a dividend.
Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis. Find out more about our editorial guidelines and team.
OSB Group Plc, through its subsidiaries, operates as a specialist lending and retail savings company in the United Kingdom and the Channel Islands.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
Read more about these checks in the individual report sections or in our analysis model.
Very undervalued with adequate balance sheet and pays a dividend.
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