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China Overseas Land & Investment Limited (HKG:688) has pleased shareholders over the past 10 years, by paying out dividends. The company currently pays out a dividend yield of 2.9% to shareholders, making it a relatively attractive dividend stock. Does China Overseas Land & Investment tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for China Overseas Land & Investment
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
Does China Overseas Land & Investment pass our checks?
The current trailing twelve-month payout ratio for the stock is 22%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 688’s payout to increase to 26% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.0%. Moreover, EPS should increase to HK$4.2. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 688 has increased its DPS from HK$0.12 to HK$0.80 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, China Overseas Land & Investment generates a yield of 2.9%, which is on the low-side for Real Estate stocks.
Next Steps:
Considering the dividend attributes we analyzed above, China Overseas Land & Investment is definitely worth keeping an eye on for someone looking to build a dedicated income 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 fundamental factors you should further research: