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Investors who want to cash in on Xinyi Solar Holdings Limited’s (HKG:968) upcoming dividend of HK$0.08 per share have only 2 days left to buy the shares before its ex-dividend date, 13 August 2018, in time for dividends payable on the 19 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Xinyi Solar Holdings’s latest financial data to analyse its dividend attributes.

See our latest analysis for Xinyi Solar Holdings

5 checks you should use to assess a dividend stock

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

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

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

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

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

How well does Xinyi Solar Holdings fit our criteria?

The current trailing twelve-month payout ratio for the stock is 48.63%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 47.42%, leading to a dividend yield of 6.71%. Furthermore, EPS is forecasted to fall to HK$0.30 in the upcoming year.

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. Unfortunately, it is really too early to view Xinyi Solar Holdings as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Relative to peers, Xinyi Solar Holdings produces a yield of 6.64%, which is high for Semiconductor stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Xinyi Solar Holdings is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three fundamental factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 968’s future growth? Take a look at our free research report of analyst consensus for 968’s outlook.

2. Valuation: What is 968 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 968 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 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.