Investors who want to cash in on HKBN Ltd’s (SEHK:1310) upcoming dividend of HK$0.26 per share have only 2 days left to buy the shares before its ex-dividend date, 03 May 2018, in time for dividends payable on the 16 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine HKBN’s latest financial data to analyse its dividend characteristics. See our latest analysis for HKBN

How I analyze a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

• Will it have the ability to keep paying its dividends going forward?

How does HKBN fare?

The current trailing twelve-month payout ratio for 1310 is 134.07%, which means that the dividend is not well-covered by its earnings. In the near future, analysts are predicting a payout ratio of 123.43%, leading to a dividend yield of around 6.44%. In addition to this, EPS should increase to HK$0.51. 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 HKBN 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, HKBN produces a yield of 4.73%, which is high for Telecom stocks.

Next Steps:

After digging a little deeper into HKBN’s yield, it’s easy to see why you should be cautious investing in the company just 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 key factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 1310’s future growth? Take a look at our free research report of analyst consensus for 1310’s outlook.

2. Valuation: What is 1310 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 1310 is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.