If you are interested in cashing in on AP Rentals Holdings Limited’s (HKG:1496) upcoming dividend of HK$0.0035 per share, you only have 2 days left to buy the shares before its ex-dividend date, 27 August 2018, in time for dividends payable on the 11 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine AP Rentals Holdings’s latest financial data to analyse its dividend characteristics.

See our latest analysis for AP Rentals Holdings

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 consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

• Will the company be able to keep paying dividend based on the future earnings growth?

Does AP Rentals Holdings pass our checks?

The current trailing twelve-month payout ratio for the stock is 42.22%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider AP Rentals Holdings as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, AP Rentals Holdings generates a yield of 2.42%, which is on the low-side for Trade Distributors stocks.

Next Steps:

After digging a little deeper into AP Rentals Holdings’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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 important factors you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for 1496’s future growth? Take a look at our free research report of analyst consensus for 1496’s outlook.

2. Historical Performance: What has 1496’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.