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Shares of Beijing Capital International Airport Company Limited (HKG:694) will begin trading ex-dividend in 4 days. To qualify for the dividend check of CN¥0.12 per share, investors must have owned the shares prior to 19 September 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Beijing Capital International Airport’s latest financial data to analyse its dividend attributes.

Check out our latest analysis for Beijing Capital International Airport

5 questions I ask before picking a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has it increased its dividend per share amount over the past?

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

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

Does Beijing Capital International Airport pass our checks?

The current trailing twelve-month payout ratio for the stock is 23.4%, which means that the dividend is covered by earnings. Going forward, analysts expect 694’s payout to increase to 39.1% of its earnings, which leads to a dividend yield of 3.3%. However, EPS is forecasted to fall to CN¥0.65 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.

Relative to peers, Beijing Capital International Airport generates a yield of 3.2%, which is on the low-side for Infrastructure stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Beijing Capital International Airport 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three pertinent aspects you should further examine: