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Shares of Modern Dental Group Limited (SEHK:3600) will begin trading ex-dividend in 3 days. To qualify for the dividend check of HK$0.04 per share, investors must have owned the shares prior to 29 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Modern Dental Group’s most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Modern Dental Group
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it the top 25% annual dividend yield payer?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share amount increased over the past?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Modern Dental Group fare?
Modern Dental Group has a trailing twelve-month payout ratio of 29.49%, which means that the dividend is covered by earnings. Going forward, analysts expect 3600’s payout to remain around the same level at 29.94% of its earnings, which leads to a dividend yield of 3.18%. Moreover, EPS should increase to HK$0.21. 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 Modern Dental Group 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. In terms of its peers, Modern Dental Group has a yield of 2.04%, which is high for Medical Equipment stocks but still below the market’s top dividend payers.
Next Steps:
Taking all the above into account, Modern Dental Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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. There are three important factors you should further research: