United Overseas Bank (SGX:U11) Has Announced That It Will Be Increasing Its Dividend To SGD0.85
On the 18th of August, United Overseas Bank Limited (SGX:U11) will raise its dividend to SGD0.85, surpassing the amount paid last year. This will result in a dividend yield of 5.7%, a figure that shareholders will find satisfying.
Take a look at our most recent examination of United Overseas Bank.
UOB Payment: Reliable Earnings Coverage
Having a high dividend yield is fantastic, but it's equally important to evaluate the long-term sustainability of the payment.
With a track record of distributing dividends for a minimum of a decade, United Overseas Bank has a substantial background in granting a portion of its profits to its shareholders. According to the latest earnings report of United Overseas Bank, the percentage of earnings paid out as dividends stands at a respectable 49%. This implies that the company has sufficient capacity to comfortably distribute its dividends without facing any financial constraints.
In the coming 3 years, it is expected that the earnings per share (EPS) will grow by 18.9%. Experts predict that the percentage of profits paid out as dividends in the future might reach 50% within the same period, and we believe that the company has the capacity to uphold this figure.
The organization has a lengthy history of paying dividends, but it hasn't been impressive due to previous reductions. In 2013, the yearly payment was SGD0.60, whereas the latest payout for a full year was SGD1.70. This implies that the company has been increasing its dividend payments by 11% each year since then. Despite having reduced the dividend in the past, United Overseas Bank has managed to grow its distributions at a fast pace. However, it's worth noting that companies that have cut their dividends once are likely to do so again in the future. Hence, it would be wise to exercise caution when considering this stock solely for its dividend income.
UOB's Dividend Could Grow
Considering that the dividend has been reduced previously, it is important for us to analyze the growth of earnings and its potential impact on future dividends. We are pleased to see that United Overseas Bank has shown commendable performance by increasing its EPS by 8.2% annually over the last five years. Earnings are consistently improving, and only a small proportion of these earnings are being distributed to shareholders.
UOB: A Promising Dividend Stock
In general, we believe that this stock could be a compelling option for generating income, especially as it plans to increase its dividend payment this year. Profits comfortably exceed distributions, and the company is generating ample cash flow. All things considered, this investment seems to offer a promising chance to earn dividends.
Companies that have a reliable policy regarding dividends are likely to attract more attention from investors compared to those that have a less reliable approach. However, it is important for investors to take into account various other factors, in addition to dividend payments, when assessing a company. For instance, we have highlighted one important factor to be cautious of before investing in United Overseas Bank. If you are someone who focuses on dividends when investing, you may also find our carefully selected list of high yield dividend stocks of interest.
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This blog post from Simply Wall St is not specific and covers a wide range of topics. We offer our opinions and insights based on past information and predictions from experts, using an impartial approach. Please note that our articles should not be considered as financial advice. It is not a suggestion to purchase or sell any stocks, and does not consider your individual goals or financial state. Our goal is to provide in-depth analysis based on fundamental data, with a focus on long-term perspectives. Keep in mind that our analysis may not include recent company announcements that may affect stock prices or qualitative information. Simply Wall St does not hold any positions in the mentioned stocks.
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