Important news for shareholders and potential investors in China Display Optoelectronics Technology Holdings Limited (SEHK:334): The dividend payment of CN¥0.04 per share will be distributed into shareholder on 27 July 2018, and the stock will begin trading ex-dividend at an earlier date, 12 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into China Display Optoelectronics Technology Holdings’s latest financial data to analyse its dividend attributes. Check out our latest analysis for China Display Optoelectronics Technology Holdings

Here’s how I find good dividend stocks

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it paying an annual yield above 75% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share risen in the past couple of years?

• Does earnings amply cover its dividend payments?

• Will the company be able to keep paying dividend based on the future earnings growth?

How does China Display Optoelectronics Technology Holdings fare?

The company currently pays out 28.95% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 28.09%, leading to a dividend yield of 3.74%. In addition to this, EPS should increase to CN¥0.07. 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 China Display Optoelectronics Technology Holdings as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether 334 one as a stable dividend player. Compared to its peers, China Display Optoelectronics Technology Holdings generates a yield of 2.56%, which is on the low-side for Tech stocks.

Next Steps:

Taking all the above into account, China Display Optoelectronics Technology Holdings is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important aspects you should further research: