Important news for shareholders and potential investors in Asia Commercial Holdings Limited (HKG:104): The dividend payment of HK$0.026 per share will be distributed to shareholders on 23 October 2018, and the stock will begin trading ex-dividend at an earlier date, 03 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Asia Commercial Holdings’s latest financial data to analyse its dividend characteristics.

See our latest analysis for Asia Commercial Holdings

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

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

• Is its earnings sufficient to payout dividend at the current rate?

• Will it be able to continue to payout at the current rate in the future?

How does Asia Commercial Holdings fare?

The company currently pays out 31.9% 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.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

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. Dividend payments from Asia Commercial Holdings have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.

In terms of its peers, Asia Commercial Holdings has a yield of 5.7%, which is high for Specialty Retail stocks.

Next Steps:

If Asia Commercial Holdings 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, 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 relevant factors you should further research: