In This Article:
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, The People’s Insurance Company (Group) of China Limited (HKG:1339) has paid dividends to shareholders, and these days it yields 1.3%. Should it have a place in your portfolio? Let’s take a look at People’s Insurance Company (Group) of China in more detail.
Check out our latest analysis for People’s Insurance Company (Group) of China
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
-
Is it paying an annual yield above 75% of dividend payers?
-
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
-
Has dividend per share risen in the past couple of years?
-
Does earnings amply cover its dividend payments?
-
Will it have the ability to keep paying its dividends going forward?
How does People’s Insurance Company (Group) of China fare?
The current trailing twelve-month payout ratio for the stock is 9.6%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 1339’s payout to remain around the same level at 11% of its earnings, which leads to a dividend yield of 1.5%. Furthermore, EPS should increase to CN¥0.44.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. 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. Unfortunately, it is really too early to view People’s Insurance Company (Group) of China as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, People’s Insurance Company (Group) of China produces a yield of 1.3%, which is on the low-side for Insurance stocks.
Next Steps:
After digging a little deeper into People’s Insurance Company (Group) of China’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three key aspects you should further research: