Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. United Overseas Australia Limited (ASX:UOS) has returned to shareholders over the past 10 years, an average dividend yield of 5.00% annually. Does United Overseas Australia tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for United Overseas Australia
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How well does United Overseas Australia fit our criteria?The company currently pays out 36.72% of its earnings as a dividend, according to its trailing twelve-month data, 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 is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. UOS has increased its DPS from A$0.01 to A$0.03 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, United Overseas Australia has a yield of 4.51%, which is high for Real Estate stocks but still below the market’s top dividend payers.
With these dividend metrics in mind, I definitely rank United Overseas Australia as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 important factors you should further examine:
- Historical Performance: What has UOS’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on United Overseas Australia’s board and the CEO’s back ground.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.