Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Golden Eagle Retail Group Limited (HKG:3308) has paid dividends to shareholders, and these days it yields 5.7%. Let’s dig deeper into whether Golden Eagle Retail Group should have a place in your portfolio.
View our latest analysis for Golden Eagle Retail 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:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it be able to continue to payout at the current rate in the future?
How well does Golden Eagle Retail Group fit our criteria?
The current trailing twelve-month payout ratio for the stock is 60%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect 3308’s payout to fall to 41% of its earnings, which leads to a dividend yield of 4.1%. However, EPS should increase to CN¥0.75, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Golden Eagle Retail Group has a yield of 5.7%, which is high for Multiline Retail stocks but still below the market’s top dividend payers.
Next Steps:
With this in mind, I definitely rank Golden Eagle Retail Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their 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 key factors you should further research: