Is BOPP the best dividend stock now?

Benso Oil Palm Plantation (BOPP) is quickly emerging as a dividend stock that could now be coveted by dividend loving investors and income funds. The company has announced about 399%y/y jump in dividend to GHS1.0623 per share in respect of the 2021 financial year, buoyed by 274.2%y/y surge in earnings to GHS92.41 million in FY2021. BOPP has benefited greatly from significant rise in global Crude Palm Oil (CPO) price in 2021, and a sharp rise in CPO prices in the first quarter of 2022 could also bode well for the company’s performance in 2022. Further, BOPP earns its revenue in USD, and the depreciation of the GHS would have also boosted its earnings performance.

Although we can attribute the jump in dividend to the improved financial performance, it is important to note that the company’s payout ratio has increased significantly to 40%, the highest in the last 11 years. BOPP is expected to payout a total of GHS36.97 million out of earnings of GHS92.41 million in 2021. The ongoing rise in the payout ratio is another signal that the company heading towards been a great dividend stock that could be coveted by investors.

BOPP is currently trading at GHS6.00 per share on the Ghana Stock Exchange, and this reflects an overall market capitalization of GHS208.80 million, and a year-to-date loss of nearly 10%. However, investors would be happy to note that the dividend per share of GHS1.0623 reflects a dividend yield of 17.7% based on the prevailing market valuation of the company. BOPP is expected to pay the dividend to shareholders on July 15, 2022.

While investors are likely to be understandably excited, it would be good to mix that excitement with a bit of caution given that BOPP’s performance is largely tied to the performances of CPO and GHS.

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