Investors who want to cash in on Melbourne Enterprises Limited’s (SEHK:158) upcoming dividend of HK$2.3 per share have only 3 days left to buy the shares before its ex-dividend date, 04 June 2018, in time for dividends payable on the 14 June 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Melbourne Enterprises can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Melbourne Enterprises

5 checks you should use to assess a dividend stock

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

• Does it pay an annual yield higher than 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 the company be able to keep paying dividend based on the future earnings growth?

How well does Melbourne Enterprises fit our criteria?

The company currently pays out 6.29% of its earnings as a dividend, according to its trailing twelve-month data, 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. 158 has increased its DPS from HK$2.5 to HK$5 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Melbourne Enterprises produces a yield of 2.58%, which is on the low-side for Real Estate stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Melbourne Enterprises is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 key aspects you should look at:

1. Valuation: What is 158 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 158 is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Melbourne Enterprises’s board and the CEO’s back ground.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.