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:

1. Future Outlook: What are well-informed industry analysts predicting for 334’s future growth? Take a look at our free research report of analyst consensus for 334’s outlook.

2. Valuation: What is 334 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 334 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.