Have you been keeping an eye on Dah Chong Hong Holdings Limited's ( HKG:1828 ) upcoming dividend of HK$0.12 per share payable on the 16 July 2019? Then you only have 1 days left before the stock starts trading ex-dividend on the 21 May 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at Dah Chong Hong Holdings's most recent financial data to examine its dividend characteristics in more detail.
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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 dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Dah Chong Hong Holdings pass our checks?
The current trailing twelve-month payout ratio for the stock is 40%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 1828's payout to remain around the same level at 39% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 6.6%. Furthermore, EPS is forecasted to fall to HK$0.44 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business . Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Dah Chong Hong Holdings as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Dah Chong Hong Holdings produces a yield of 6.4%, which is high for Retail Distributors stocks.
With these dividend metrics in mind, I definitely rank Dah Chong Hong Holdings as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. Below, I've compiled three key factors you should look at:
- Future Outlook : What are well-informed industry analysts predicting for 1828’s future growth? Take a look at our free research report of analyst consensus for 1828’s outlook.
- Valuation : What is 1828 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 1828 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 .
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.