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Investors who want to cash in on China Sunsine Chemical Holdings Ltd.'s (SGX:CH8) upcoming dividend of CN¥0.055 per share have only 1 days left to buy the shares before its ex-dividend date, 08 May 2019, in time for dividends payable on the 24 May 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding China Sunsine Chemical Holdings can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
View our latest analysis for China Sunsine Chemical Holdings
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it paying an annual yield above 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has the amount of dividend per share grown over the past?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does China Sunsine Chemical Holdings fare?
The company currently pays out 23% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CH8's payout to remain around the same level at 21% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.4%. Moreover, EPS is forecasted to fall to CN¥0.93 in the upcoming year.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of CH8 it has increased its DPS from CN¥0.045 to CN¥0.27 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 CH8 a true dividend rockstar.
Relative to peers, China Sunsine Chemical Holdings has a yield of 4.7%, which is high for Chemicals stocks but still below the market's top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, China Sunsine Chemical Holdings is definitely worth considering for investors looking to build a dedicated income 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. Below, I've compiled three fundamental factors you should further research: