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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Beijing Capital International Airport Company Limited (HKG:694) has paid a dividend to shareholders. It currently yields 3.7%. Should it have a place in your portfolio? Let's take a look at Beijing Capital International Airport in more detail.
Check out our latest analysis for Beijing Capital International Airport
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it paying an annual yield above 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has dividend per share amount increased over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How well does Beijing Capital International Airport fit our criteria?
Beijing Capital International Airport has a trailing twelve-month payout ratio of 39%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 694's payout to remain around the same level at 40% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 3.0%. In addition to this, EPS is forecasted to fall to CN¥0.62 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Unfortunately, it is really too early to view Beijing Capital International Airport 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, Beijing Capital International Airport generates a yield of 3.7%, which is on the low-side for Infrastructure stocks.
Next Steps:
Whilst there are few things you may like about Beijing Capital International Airport from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I've put together three essential aspects you should look at: