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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Bauhaus International (Holdings) Limited (HKG:483) has paid dividends to shareholders, and these days it yields 6.0%. Let’s dig deeper into whether Bauhaus International (Holdings) should have a place in your portfolio.
Check out our latest analysis for Bauhaus International (Holdings)
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has dividend per share risen in the past couple of years?
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Is is able to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does Bauhaus International (Holdings) fit our criteria?
The company currently pays out 83% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from Bauhaus International (Holdings) have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, Bauhaus International (Holdings) has a yield of 6.0%, which is high for Luxury stocks.
Next Steps:
If you are building an income portfolio, then Bauhaus International (Holdings) is a complicated choice since it has some positive aspects as well as negative ones. 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 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 key aspects you should further research: