OC Oerlikon (VTX:OERL) Has Affirmed Its Dividend Of CHF0.35

OC Oerlikon Corporation AG (VTX:OERL) will pay a dividend of CHF0.35 on the 11th of April. The dividend yield will be 4.7% based on this payment which is still above the industry average.

Check out our latest analysis for OC Oerlikon

OC Oerlikon's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, OC Oerlikon's dividend made up quite a large proportion of earnings but only 59% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Over the next year, EPS is forecast to expand by 10.0%. If the dividend continues on this path, the payout ratio could be 68% by next year, which we think can be pretty sustainable going forward.

OC Oerlikon Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the first annual payment was CHF0.20, compared to the most recent full-year payment of CHF0.35. This means that it has been growing its distributions at 5.8% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see OC Oerlikon has been growing its earnings per share at 15% a year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

We Really Like OC Oerlikon's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for OC Oerlikon that investors should know about before committing capital to this stock. Is OC Oerlikon not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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