Omega Flex's (NASDAQ:OFLX) Dividend Will Be Increased To US$0.30

Omega Flex, Inc. (NASDAQ:OFLX) has announced that it will be increasing its dividend on the 6th of July to US$0.30. This takes the annual payment to 0.8% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for Omega Flex

Omega Flex's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Omega Flex's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS could expand by 7.4% if recent trends continue. If the dividend continues on this path, the payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.

Omega Flex Is Still Building Its Track Record

Omega Flex's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2013, the dividend has gone from US$0.42 to US$1.20. This means that it has been growing its distributions at 14% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Omega Flex Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Omega Flex has impressed us by growing EPS at 7.4% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On Omega Flex's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Omega Flex that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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