Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past, Quanzhou Huixin Micro-Credit Co Ltd. (SEHK:1577) has returned an average of 4.00% per year to investors in the form of dividend payouts. Does Quanzhou Huixin Micro-Credit tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Quanzhou Huixin Micro-Credit

5 questions I ask before picking 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?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

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

• Will it be able to continue to payout at the current rate in the future?

How well does Quanzhou Huixin Micro-Credit fit our criteria?

Quanzhou Huixin Micro-Credit has a trailing twelve-month payout ratio of 36.48%, 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. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Quanzhou Huixin Micro-Credit as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record. Compared to its peers, Quanzhou Huixin Micro-Credit has a yield of 3.52%, which is on the low-side for Consumer Finance stocks.

Next Steps:

Whilst there are few things you may like about Quanzhou Huixin Micro-Credit from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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 further research: