Read This Before Considering Olympia Financial Group Inc. (TSE:OLY) For Its Upcoming CA$0.50 Dividend
Olympia Financial Group Inc. (TSE:OLY) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least one business day to settle. Therefore, if you purchase Olympia Financial Group's shares on or after the 19th of November, you won't be eligible to receive the dividend, when it is paid on the 30th of November.
The company's next dividend payment will be CA$0.50 per share, and in the last 12 months, the company paid a total of CA$6.80 per share. Based on the last year's worth of payments, Olympia Financial Group stock has a trailing yield of around 6.3% on the current share price of CA$108.78. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year, Olympia Financial Group paid out 109% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.
When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.
View our latest analysis for Olympia Financial Group
Click here to see how much of its profit Olympia Financial Group 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. Fortunately for readers, Olympia Financial Group's earnings per share have been growing at 14% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Olympia Financial Group has increased its dividend at approximately 10% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Is Olympia Financial Group worth buying for its dividend? Olympia Financial Group has been generating credible earnings per share growth, although its dividend payments were not adequately covered by earnings. We're unconvinced on the company's merits, and think there might be better opportunities out there.
If you're not too concerned about Olympia Financial Group's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We've spotted 2 warning signs for Olympia Financial Group you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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