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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Chuang’s Consortium International Limited (HKG:367) has paid dividends to shareholders, and these days it yields 6.3%. Does Chuang’s Consortium International tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Chuang’s Consortium International
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:
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Is it paying an annual yield above 75% of dividend payers?
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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 risen in the past couple of years?
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Can it afford to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Chuang’s Consortium International fit our criteria?
Chuang’s Consortium International has a trailing twelve-month payout ratio of 11%, 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 considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although 367’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, Chuang’s Consortium International produces a yield of 6.3%, which is high for Real Estate stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Chuang’s Consortium International is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three essential aspects you should look at: