In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Nanfang Communication Holdings Limited (HKG:1617) has recently paid dividends to shareholders, and currently yields 1.3%. Does Nanfang Communication Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Nanfang Communication Holdings
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
-
Is it the top 25% annual dividend yield payer?
-
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
-
Has dividend per share amount increased 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?
How well does Nanfang Communication Holdings fit our criteria?
Nanfang Communication Holdings has a trailing twelve-month payout ratio of 44%, which means that the dividend is 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 thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Nanfang Communication 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.
Relative to peers, Nanfang Communication Holdings has a yield of 1.3%, which is on the low-side for Communications stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Nanfang Communication Holdings 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, 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 fundamental factors you should look at: