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Attention dividend hunters! Quanzhou Huixin Micro-Credit Co Ltd. (SEHK:1577) will be distributing its dividend of CN¥0.05 per share on the 16 August 2018, and will start trading ex-dividend in 3 days time on the 15 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Quanzhou Huixin Micro-Credit’s latest financial data to analyse its dividend attributes. See our latest analysis for Quanzhou Huixin Micro-Credit

5 checks you should do on a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

How well does Quanzhou Huixin Micro-Credit fit our criteria?

The current trailing twelve-month payout ratio for the stock is 37.38%, 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 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. The reality is that it is too early to consider Quanzhou Huixin Micro-Credit as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record. Relative to peers, Quanzhou Huixin Micro-Credit has a yield of 4.66%, which is on the low-side for Consumer Finance stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Quanzhou Huixin Micro-Credit for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. Below, I’ve compiled three pertinent factors you should look at: