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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Bank of Tianjin Co Ltd (HKG:1578) has paid a dividend to shareholders in the last few years. It currently yields 4.7%. Should it have a place in your portfolio? Let’s take a look at Bank of Tianjin in more detail.

See our latest analysis for Bank of Tianjin

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?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it have the ability to keep paying its dividends going forward?

Does Bank of Tianjin pass our checks?

The current trailing twelve-month payout ratio for the stock is 26%, 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.

When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

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 Bank of Tianjin as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, Bank of Tianjin produces a yield of 4.7%, which is on the low-side for Banks stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Bank of Tianjin for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I’ve put together three relevant factors you should look at: