In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the last few years Yunnan Water Investment Co., Limited (HKG:6839) has paid a dividend to shareholders. Today it yields 6.7%. Does Yunnan Water Investment tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Yunnan Water Investment
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
-
Is their annual yield among the top 25% of dividend payers?
-
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
-
Has it increased its dividend per share amount over the past?
-
Can it afford to pay the current rate of dividends from its earnings?
-
Will it be able to continue to payout at the current rate in the future?
Does Yunnan Water Investment pass our checks?
The current trailing twelve-month payout ratio for the stock is 38%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. The reality is that it is too early to consider Yunnan Water Investment as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Yunnan Water Investment produces a yield of 6.7%, which is high for Water Utilities stocks.
Next Steps:
If you are building an income portfolio, then Yunnan Water Investment is a complicated choice since it has some positive aspects as well as negative ones. 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. Below, I’ve compiled three key aspects you should further examine: