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Have you been keeping an eye on Billion Industrial Holdings Limited’s (SEHK:2299) upcoming dividend of CN¥0.17 per share payable on the 16 May 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 03 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Billion Industrial Holdings’s latest financial data to analyse its dividend characteristics. See our latest analysis for Billion Industrial Holdings
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it the top 25% annual dividend yield payer?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has it increased its dividend per share amount 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 does Billion Industrial Holdings fare?
Billion Industrial Holdings has a trailing twelve-month payout ratio of 49.42%, 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. 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. The reality is that it is too early to consider Billion Industrial Holdings as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Billion Industrial Holdings generates a yield of 1.63%, which is on the low-side for Luxury stocks.
Next Steps:
After digging a little deeper into Billion Industrial 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, 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. Below, I’ve compiled three essential factors you should further examine: