Free Trial

Get Paid While You Wait - OneMain's Juicy Dividends

Get Paid While You Wait - OneMain's Juicy Dividends

Key Points

  • OneMain Holdings (NYSE:OMF) reported Q1 2024 EPS of $1.45, surpassing expectations of $1.38, and revenue of $1.17 billion.
  • The company's managed receivables increased 6% year over year to $22 billion and improved its operational expense ratio to 6.6%.
  • OneMain's dividend yield stands at 8.40%, supported by robust cash flows and a P/E ratio under 10.
  • Analysts raised their price targets for OMF stock following the earnings report, citing strong financial performance and growth prospects.
  • Despite a decline in loan originations, OneMain presents an attractive opportunity for dividend investors.
  • 5 stocks we like better than OneMain

OneMain Holdings NYSE: OMF , a leading provider of personal loans and insurance products to subprime customers, stands out as a growing dividend stock with an attractive valuation. With a dividend yield of 8.40% and a P/E ratio under 10, OMF’s growing dividends are backed by reliable profitability - allowing the company to invest in growth while rewarding shareholders in the process.

In Q1 2024, the company reported an EPS of $1.45, exceeding expectations of $1.38, and revenue of $1.17 billion. The company grew managed receivables (the total value of loans the company owns) 6% year-over-year to $22 billion . In addition, the operational expense ratio improved from 7.1% a year ago to 6.6% in the past quarter, highlighting effective cost control.

The quarter's results were driven by a 7% increase in interest income to $1.2 billion. Despite higher interest expenses and increased net charge-offs, the rise in interest income significantly boosted OneMain's bottom line. The company maintained stable net interest margins at 4.9%, though the net income margin dipped to 11.5% from 12% in Q4 2023 due to provisions for finance receivable losses.

CEO Douglas Shulman attributes this growth to expanded product offerings and a robust balance sheet, with managed receivables expected to reach $24 billion by year-end, including contributions from the Foursight acquisition, an auto financing operation.

Following the earnings report, OMF's stock initially rose, rallying 5% from the previous day’s close, but has since traded lower, providing a buying opportunity for investors. Q1 2024 earnings largely mirrored that of its competitors: Ally Financial NYSE: ALLY also beat EPS expectations, while Synchrony Financial NYSE: SYF  beat revenue estimates by 25%, suggesting bullishness for the industry as a whole.

Analysts took note of OneMain’s outperformance and adjusted their price targets accordingly. Royal Bank of Canada, Wells Fargo 9 NYSE: WFC , and JMP Securities raised their price targets to $61, $53, and $62, respectively. The company projects full-year revenue growth of 6% to 8%, with managed receivables expected to hit $24 billion for the full year. Net charge-offs are anticipated to be between 7.7% and 8.3%, peaking in the first half of 2024. Management also aims to keep the operating expense ratio around 6.7%, reflecting caution in uncertain times.


When looking at dividend stocks, it is crucial to ask two questions:

  1. Is the dividend sustainable?
  2. Is the dividend preventing the company from investing more aggressively in growth?

OneMain Dividend Payments

Dividend Yield
8.39%
Annual Dividend
$4.16
Annualized 3-Year Dividend Growth
40.57%
Dividend Payout Ratio
81.09%
Recent Dividend Payment
May. 17
See Full Details

The answer to both of these questions is bullish for the stock and reaffirms that OMF investors get paid while they wait for the company to realize its full growth potential.

Over the past five years, OneMain has demonstrated a strong commitment to returning value to shareholders through regular and special dividends, notably increasing dividends to $4.00 per share in 2023 and to an annualized $4.16 in Q1 2024.

These dividends, supported by robust cash flows, are complemented by active share buybacks, with $3.5 billion paid out in dividends in the last five years and $780 million in share repurchases. Despite economic challenges, OneMain has maintained steady revenue growth and stable earnings, beating EPS expectations in seven of the last ten quarters.

The Q1 2024 earnings report also noted a 10% year-over-year decline in loan originations to $2.5 billion due to strategic credit tightening and increased pricing to ensure high-quality, profitable loans. While some can view this as a setback, it is prudent for the company to tighten lending standards when the economy is uncertain. The company still achieved 7% year-over-year revenue growth - this cautious approach merely prioritizes long-term stability and profitability.

Despite somewhat elevated short-term delinquency rates at 2.7% and economic uncertainty affecting subprime customers, OneMain's extensive customer base of over 3 million provides a solid foundation for growth. Utilizing over 1,000 variables to make precise lending decisions and growing both dividends and earnings, OneMain demonstrates resilience and presents an attractive opportunity for dividend investors.

Should you invest $1,000 in OneMain right now?

Before you consider OneMain, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and OneMain wasn't on the list.

While OneMain currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

A Guide To High-Short-Interest Stocks Cover

MarketBeat's analysts have just released their top five short plays for July 2024. Learn which stocks have the most short interest and how to trade them. Click the link below to see which companies made the list.

Get This Free Report
Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
OneMain (OMF)
4.956 of 5 stars
$49.59+1.1%8.39%9.67Moderate Buy$54.83
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Recent Videos

The Power of Stock Buybacks: Investor Insights
NVIDIA Tops Microsoft and Apple for Most Valuable Company
Dividend Kings: The Secret to Steady and Growing Income

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines