Yahoo Finance Oracle Corporation (NYSE:ORCL): 2 Days To Buy Before The Ex-Dividend Date
Attention dividend hunters! Oracle Corporation (NYSE:ORCL) will be distributing its dividend of US$0.19 per share on the 30 January 2019, and will start trading ex-dividend in 2 days time on the 15 January 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Oracle’s latest financial data to analyse its dividend characteristics.
View our latest analysis for Oracle
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5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Oracle pass our checks?
The company currently pays out 74% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect ORCL’s payout to fall to 20% of its earnings. Assuming a constant share price, this equates to a dividend yield of 1.6%. However, EPS should increase to $2.85, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of ORCL it has increased its DPS from $0.20 to $0.76 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes ORCL a true dividend rockstar.
In terms of its peers, Oracle has a yield of 1.6%, which is on the low-side for Software stocks.
Next Steps:
With this in mind, I definitely rank Oracle as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for ORCL’s future growth? Take a look at our free research report of analyst consensus for ORCL’s outlook.
Valuation: What is ORCL 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 ORCL is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
