Oil-Dri Corporation of America (NYSE:ODC) Is Paying Out A Dividend Of $0.29

Oil-Dri Corporation of America (NYSE:ODC) has announced that it will pay a dividend of $0.29 per share on the 24th of May. Including this payment, the dividend yield on the stock will be 1.6%, which is a modest boost for shareholders' returns.

See our latest analysis for Oil-Dri Corporation of America

Oil-Dri Corporation of America'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, Oil-Dri Corporation of America was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 34.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 16%, which is in the range that makes us comfortable with the sustainability of the dividend.

Oil-Dri Corporation of America Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from $0.76 total annually to $1.16. This works out to be a compound annual growth rate (CAGR) of approximately 4.3% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Oil-Dri Corporation of America has been growing its earnings per share at 35% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Oil-Dri Corporation of America Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Oil-Dri Corporation of America might even raise payments in the future. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Oil-Dri Corporation of America that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.