A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. PICC Property and Casualty Company Limited (SEHK:2328) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Let’s dig deeper into whether PICC Property and Casualty should have a place in your portfolio. View our latest analysis for PICC Property and Casualty
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it the top 25% annual dividend yield payer?
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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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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?
Does PICC Property and Casualty pass our checks?
PICC Property and Casualty has a payout ratio of 23.55%, which means that the dividend is covered by earnings. Going forward, analysts expect 2328’s payout to remain around the same level at 25.78% of its earnings, which leads to a dividend yield of 2.96%. Moreover, EPS should increase to CN¥1.56. 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. Compared to its peers, PICC Property and Casualty has a yield of 1.80%, which is high for insurance stocks but still below the low risk savings rate.
Next Steps:
If PICC Property and Casualty is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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 essential factors you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for 2328’s future growth? Take a look at our free research report of analyst consensus for 2328’s outlook.
2. Valuation: What is 2328 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 2328 is currently mispriced by the market.