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Investors who want to cash in on TK Group (Holdings) Limited’s (SEHK:2283) upcoming dividend of HK$0.12 per share have only 2 days left to buy the shares before its ex-dividend date, 17 May 2018, in time for dividends payable on the 01 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine TK Group (Holdings)’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for TK Group (Holdings)
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it paying an annual yield above 75% 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 dividend per share amount increased over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does TK Group (Holdings) fit our criteria?
The current trailing twelve-month payout ratio for the stock is 46.75%, which means that the dividend is covered by earnings. Going forward, analysts expect 2283’s payout to remain around the same level at 48.67% of its earnings, which leads to a dividend yield of 4.62%. In addition to this, EPS should increase to HK$0.47. 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. Unfortunately, it is really too early to view TK Group (Holdings) as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, TK Group (Holdings) has a yield of 2.87%, which is high for Machinery stocks but still below the market’s top dividend payers.
Next Steps:
Taking all the above into account, TK Group (Holdings) is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three fundamental factors you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for 2283’s future growth? Take a look at our free research report of analyst consensus for 2283’s outlook.
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Valuation: What is 2283 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 2283 is currently mispriced by the market.
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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.