On the 16 October 2018, CNOOC Limited (HKG:883) will be paying shareholders an upcoming dividend amount of CN¥0.30 per share. However, investors must have bought the company’s stock before 06 September 2018 in order to qualify for the payment. That means you have only 2 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding CNOOC can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

Check out our latest analysis for CNOOC

Here’s how I find good dividend stocks

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?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Can it afford 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?

How does CNOOC fare?

The current trailing twelve-month payout ratio for the stock is 64.8%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 45.8%, leading to a dividend yield of 5.0%. However, EPS should increase to CN¥1.28, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although 883’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

Relative to peers, CNOOC has a yield of 3.9%, which is on the low-side for Oil and Gas stocks.

Next Steps:

Taking into account the dividend metrics, CNOOC ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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:

1. Future Outlook: What are well-informed industry analysts predicting for 883’s future growth? Take a look at our free research report of analyst consensus for 883’s outlook.

2. Valuation: What is 883 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 883 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.