A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. United Overseas Insurance Limited (SGX:U13) has returned to shareholders over the past 10 years, an average dividend yield of 4.00% annually. Let’s dig deeper into whether United Overseas Insurance should have a place in your portfolio. View our latest analysis for United Overseas Insurance
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
-
Is it the top 25% annual dividend yield payer?
-
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
-
Has the amount of dividend per share grown over the past?
-
Is its earnings sufficient to payout dividend at the current rate?
-
Will it have the ability to keep paying its dividends going forward?
How well does United Overseas Insurance fit our criteria?
The current trailing twelve-month payout ratio for the stock is 31.55%, 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 there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, United Overseas Insurance has a yield of 3.06%, which is high for Insurance stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about United Overseas Insurance from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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. There are three key aspects you should look at:
-
1. Valuation: What is U13 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 U13 is currently mispriced by the market.
-
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on United Overseas Insurance’s board and the CEO’s back ground.
-
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 pass 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.