Have you been keeping an eye on CIFI Holdings (Group) Co Ltd’s (HKG:884) upcoming dividend of CN¥0.07 per share payable on the 22 October 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 21 September 2018. Should you diversify into CIFI Holdings (Group) and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

View our latest analysis for CIFI Holdings (Group)

5 questions to ask before buying a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• 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 it increased its dividend per share amount over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

Does CIFI Holdings (Group) pass our checks?

CIFI Holdings (Group) has a trailing twelve-month payout ratio of 25.4%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 36.0%, leading to a dividend yield of 10.2%. Furthermore, EPS should increase to CN¥0.86. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view CIFI Holdings (Group) as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, CIFI Holdings (Group) generates a yield of 5.6%, which is high for Real Estate stocks but still below the market’s top dividend payers.

Next Steps:

Taking all the above into account, CIFI Holdings (Group) 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three pertinent factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 884’s future growth? Take a look at our free research report of analyst consensus for 884’s outlook.

2. Valuation: What is 884 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 884 is currently mispriced by the market.

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.