Oppenheimer Holdings Inc. (NYSE:OPY) has announced that it will pay a dividend of $0.18 per share on the 27th of February. The dividend yield is 0.8% based on this payment, which is a little bit low compared to the other companies in the industry.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Oppenheimer Holdings' stock price has increased by 34% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
Oppenheimer Holdings' Projected Earnings Seem Likely To Cover Future Distributions
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, Oppenheimer Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
If the trend of the last few years continues, EPS will grow by 7.8% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 12%, which is in the range that makes us comfortable with the sustainability of the dividend.
See our latest analysis for Oppenheimer Holdings
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of $0.44 in 2016 to the most recent total annual payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 5.0% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
Oppenheimer Holdings Could Grow Its Dividend
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Oppenheimer Holdings has seen EPS rising for the last five years, at 7.8% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Oppenheimer Holdings' prospects of growing its dividend payments in the future.
Our Thoughts On Oppenheimer Holdings' Dividend
Overall, a consistent dividend is a good thing, and we think that Oppenheimer Holdings has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. 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. As an example, we've identified 1 warning sign for Oppenheimer Holdings that you should be aware of before investing. 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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