United Overseas Bank (SGX:U11) Has Announced A Dividend Of SGD1.10

The board of United Overseas Bank Limited (SGX:U11) has announced that it will pay a dividend on the 28th of August, with investors receiving SGD1.10 per share. Based on this payment, the dividend yield for the company will be 5.2%, which is fairly typical for the industry.

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United Overseas Bank's Earnings Will Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable.

United Overseas Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but United Overseas Bank's payout ratio of 50% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 16.9%. The future payout ratio could be 54% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for United Overseas Bank

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of SGD0.75 in 2015 to the most recent total annual payment of SGD1.84. This means that it has been growing its distributions at 9.4% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. United Overseas Bank has seen EPS rising for the last five years, at 10% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like United Overseas Bank's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for United Overseas Bank that you should be aware of before investing. Is United Overseas Bank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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