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If you are interested in cashing in on China Tian Lun Gas Holdings Limited’s (HKG:1600) upcoming dividend of CN¥0.054 per share, you only have 4 days left to buy the shares before its ex-dividend date, 19 October 2018, in time for dividends payable on the 30 November 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into China Tian Lun Gas Holdings’s latest financial data to analyse its dividend attributes.

Check out our latest analysis for China Tian Lun Gas Holdings

How I analyze a dividend stock

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

• Is it paying an annual yield above 75% 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?

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

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does China Tian Lun Gas Holdings fare?

The current trailing twelve-month payout ratio for the stock is 18%, which means that the dividend is covered by earnings. Going forward, analysts expect 1600’s payout to increase to 32% of its earnings, which leads to a dividend yield of around 5.2%. In addition to this, EPS should increase to CN¥0.88. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider China Tian Lun Gas 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.

Compared to its peers, China Tian Lun Gas Holdings has a yield of 1.8%, which is on the low-side for Gas Utilities stocks.

Next Steps:

After digging a little deeper into China Tian Lun Gas Holdings’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental factors you should look at: