We Wouldn't Be Too Quick To Buy Olympia Financial Group Inc. (TSE:OLY) Before It Goes Ex-Dividend

By
Simply Wall St
Published
May 14, 2022
TSX:OLY
Source: Shutterstock

Readers hoping to buy Olympia Financial Group Inc. (TSE:OLY) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Olympia Financial Group's shares on or after the 18th of May, you won't be eligible to receive the dividend, when it is paid on the 31st of May.

The company's next dividend payment will be CA$0.27 per share, and in the last 12 months, the company paid a total of CA$2.76 per share. Based on the last year's worth of payments, Olympia Financial Group stock has a trailing yield of around 5.0% on the current share price of CA$55.61. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Olympia Financial Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Last year Olympia Financial Group paid out 91% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

Click here to see how much of its profit Olympia Financial Group paid out over the last 12 months.

historic-dividend
TSX:OLY Historic Dividend May 14th 2022

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Olympia Financial Group earnings per share are up 5.5% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Olympia Financial Group has delivered an average of 0.6% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Final Takeaway

Should investors buy Olympia Financial Group for the upcoming dividend? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 91% of last year's earnings. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

With that being said, if you're still considering Olympia Financial Group as an investment, you'll find it beneficial to know what risks this stock is facing. For instance, we've identified 2 warning signs for Olympia Financial Group (1 shouldn't be ignored) 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.