A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. CNQC International Holdings Limited (HKG:1240) has recently paid dividends to shareholders, and currently yields 8.0%. Let’s dig deeper into whether CNQC International Holdings should have a place in your portfolio.

View our latest analysis for CNQC International Holdings

Here’s how I find good dividend stocks

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

• Is their annual yield among the top 25% of dividend payers?

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

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

• Does earnings amply cover its dividend payments?

• Will it be able to continue to payout at the current rate in the future?

How well does CNQC International Holdings fit our criteria?

The company currently pays out 96.9% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect 1240’s payout to fall into a more sustainable range of 49.8% of its earnings, which leads to a dividend yield of around 8.8%.

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 CNQC International Holdings 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.

In terms of its peers, CNQC International Holdings has a yield of 8.0%, which is high for Real Estate stocks.

Next Steps:

Taking all the above into account, CNQC International 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, 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. There are three fundamental factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 1240’s future growth? Take a look at our free research report of analyst consensus for 1240’s outlook.

2. Historical Performance: What has 1240’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.