Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Wah Ha Realty Company Limited (HKG:278) has paid a dividend to shareholders. It currently yields 4.3%. Does Wah Ha Realty tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Wah Ha Realty
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has the amount of dividend per share grown over the past?
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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 does Wah Ha Realty fare?
The current trailing twelve-month payout ratio for the stock is 10%, meaning the dividend is sufficiently 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.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Wah Ha Realty produces a yield of 4.3%, which is high for Real Estate stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Wah Ha Realty from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I’ve put together three relevant aspects you should further research: