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On the 22 February 2019, Orient Paper & Industries Limited (NSE:ORIENTPPR) will be paying shareholders an upcoming dividend amount of ₹0.50 per share. However, investors must have bought the company’s stock before 31 January 2019 in order to qualify for the payment. That means you have only 1 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Orient Paper & Industries can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
Check out our latest analysis for Orient Paper & Industries
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5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it paying an annual yield above 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How well does Orient Paper & Industries fit our criteria?
Orient Paper & Industries has a trailing twelve-month payout ratio of 27%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Not only have dividend payouts from Orient Paper & Industries fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers, Orient Paper & Industries generates a yield of 3.2%, which is high for Forestry stocks.
Next Steps:
Taking all the above into account, Orient Paper & Industries is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key factors you should look at: