1 Dividend Stock Paying $5.80 Per Share in Dividends: Time to Buy the Stock?

This dividend stock now offers up a 7.2% dividend yield at $5.80 per share, with monthly payouts! But is it valuable enough?

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 12, 2024 4:50 pm EDT

| More on: OLY

The average Canadian dividend investor typically seeks stable, long-term growth and income, with a preference for blue-chip companies listed on the TSX. Yet according to recent surveys, only about 40% of Canadian investors hold dividend-paying stocks in their portfolios, with the average yield targeted around 4-5% annually.

But how many of these investors reinvest their dividends, a strategy known as dividend-reinvestment plans (DRIPs)? This compounds returns over time. And today, we’re going to look at one dividend stock offering a great deal on dividends.

Olympic Financial

Olympia Financial Group (TSX: OLY) is a Canadian financial services company that operates through various subsidiaries. It provides a range of services, including foreign exchange, investment account administration, corporate and shareholder services, and Tax-Free Savings Account (TFSA) administration. The company is known for its steady growth and commitment to providing innovative financial products and services across Canada.

In particular, the dividend stock is notable for its consistency and growth. Olympia has a strong track record of paying regular monthly dividends to its shareholders, reflecting its solid financial performance and management’s commitment to returning value to investors.

Furthermore, Olympia has steadily increased its dividend payouts over the years, making it an attractive option for income-focused investors. The company’s ability to maintain and even grow its dividends, even in challenging economic environments, speaks to its robust business model and strong cash flow generation.

Recent earnings

That’s all well and good in the past, but what about the future? To learn more, we can dive into the company’s recent earnings report. Olympia reported strong financial results for the first quarter of 2024, demonstrating a solid performance across key metrics. Notably, the company achieved a 10% increase in total net earnings and comprehensive income, reaching $5.74 million, up from $5.23 million in the same period last year.

This growth was driven by a 9% increase in total revenue, which rose to $25.84 million, mainly due to higher trust income in the Investment Account Services division. Plus, the dividend stock reported a 15% increase in trust, interest, and other income. This came from the favourable impact of higher interest rates on trust fund placements over the past year.

While the overall financial performance was strong, Olympia did experience some increases in expenses, which may be a cause for concern. Direct and administrative expenses, excluding depreciation and amortization, rose by 6% to $16.99 million from $16.10 million in the previous year. This increase was primarily due to higher salaries, bonuses, and management fees within the Investment Account Services division, driven by revenue growth. Although the expense growth was tied to revenue increases, it still represents a significant cost pressure that could affect profitability if not managed carefully. In short, keep an eye on it.

Bottom line

Overall, Olympia’s recent earnings report highlights positive momentum, with solid revenue and income growth. The company has successfully leveraged its strengths in the financial services sector, benefiting from rising interest rates and a growing client base.

Meanwhile, Olympia presents an attractive valuation based on several key metrics. With a trailing price-to-earnings ratio of 10.55, the stock appears reasonably priced relative to its earnings, especially compared to the broader market. The company’s also holds a modest amount of debt, as indicated by the low total debt-to-equity ratio of 12.10%.

Add in that the stock offers a compelling dividend yield of 7.20%, which is attractive for income-seeking investors. The payout ratio of 55.06% also suggests that Olympia is managing its dividend payments not just well but even conservatively. This ensures it can sustain these payments even in varying market conditions. In fact, here is what a $5,000 investment could get you in dividends today.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	PORTFOLIO TOTAL
OLY	$100.50	49	$5.80	$284.20	monthly	$4,924.50

So, now that there is one stock offering a significant dividend at $5.80, I would certainly recommend you latch on while you still can, especially for a $284.20 dividend dished out monthly.