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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Raffles Medical Group Ltd (SGX:BSL) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Does Raffles Medical Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Raffles Medical Group

Here’s how I find good dividend stocks

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

• Does it pay an annual yield higher than 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• 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?

Does Raffles Medical Group pass our checks?

The current trailing twelve-month payout ratio for the stock is 49.81%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 33.62%, leading to a dividend yield of 1.79%. In addition to this, EPS is also forecasted to fall to SGD0.04 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward. 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. Although BSL’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, Raffles Medical Group generates a yield of 1.82%, which is high for Healthcare stocks but still below the low risk savings rate.

Next Steps:

If you are building an income portfolio, then Raffles Medical Group is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 pertinent factors you should look at: