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Attention dividend hunters! Tradelink Electronic Commerce Limited (HKG:536) will be distributing its dividend of HK$0.035 per share on the 09 October 2018, and will start trading ex-dividend in 3 days time on the 21 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Tradelink Electronic Commerce’s latest financial data to analyse its dividend characteristics.
View our latest analysis for Tradelink Electronic Commerce
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is their annual yield among the top 25% 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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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Tradelink Electronic Commerce fare?
The current trailing twelve-month payout ratio for 536 is 98.4%, meaning the dividend is not sufficiently covered by its 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.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 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, Tradelink Electronic Commerce has a yield of 8.0%, which is high for IT stocks.
Next Steps:
If you are building an income portfolio, then Tradelink Electronic Commerce 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 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 look at: