Ocean Bio-Chem (NASDAQ:OBCI) Will Pay A Dividend Of US$0.03

Ocean Bio-Chem, Inc.'s (NASDAQ:OBCI) investors are due to receive a payment of US$0.03 per share on 23rd of September. This payment means the dividend yield will be 1.1%, which is below the average for the industry.

See our latest analysis for Ocean Bio-Chem

Ocean Bio-Chem's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Ocean Bio-Chem was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 81.8% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 5.7%, which is in the range that makes us comfortable with the sustainability of the dividend.

Ocean Bio-Chem's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from US$0.06 in 2017 to the most recent annual payment of US$0.12. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. Ocean Bio-Chem has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Ocean Bio-Chem has seen EPS rising for the last five years, at 82% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like Ocean Bio-Chem's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Ocean Bio-Chem that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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