Important news for shareholders and potential investors in Retail Opportunity Investments Corp (NASDAQ:ROIC): The dividend payment of $0.20 per share will be distributed into shareholder on 28 June 2018, and the stock will begin trading ex-dividend at an earlier date, 13 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Retail Opportunity Investments’s latest financial data to analyse its dividend attributes. View out our latest analysis for Retail Opportunity Investments
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Is is able to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Retail Opportunity Investments fit our criteria?Although REITs are expected to payout a high portion of the earnings, Retail Opportunity Investments currently pays out more than double its net income, meaning that dividend is predominantly funded by retained earnings. Furthermore, analysts are forecasting the payout ratio to remain at this high level going forward, leading to a future of uncertainty around the stability of ROIC’s dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Retail Opportunity Investments as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Retail Opportunity Investments generates a yield of 4.24%, which is on the low-side for REITs stocks.
After digging a little deeper into Retail Opportunity Investments’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three important factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for ROIC’s future growth? Take a look at our free research report of analyst consensus for ROIC’s outlook.
- Valuation: What is ROIC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ROIC is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.