A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, China Jinmao Holdings Group Limited (SEHK:817) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether China Jinmao Holdings Group should have a place in your portfolio. See our latest analysis for China Jinmao Holdings Group

5 questions I ask before picking a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

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

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

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

Does China Jinmao Holdings Group pass our checks?

The current trailing twelve-month payout ratio for the stock is 40.23%, which means that the dividend is covered by earnings. Going forward, analysts expect 817’s payout to increase to 45.34% of its earnings, which leads to a dividend yield of 6.40%. In addition to this, EPS should increase to CN¥0.45. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Although 817’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, China Jinmao Holdings Group generates a yield of 4.07%, which is high for Real Estate stocks but still below the market’s top dividend payers.

Next Steps:

With this in mind, I definitely rank China Jinmao Holdings Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 key factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 817’s future growth? Take a look at our free research report of analyst consensus for 817’s outlook.

2. Valuation: What is 817 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 817 is currently mispriced by the market.

3. Other 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.