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Important news for shareholders and potential investors in Lum Chang Holdings Limited (SGX:L19): The dividend payment of S$0.015 per share will be distributed to shareholders on 23 November 2018, and the stock will begin trading ex-dividend at an earlier date, 05 November 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Lum Chang Holdings’s latest financial data to analyse its dividend characteristics.
Check out our latest analysis for Lum Chang Holdings
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is their annual yield among the top 25% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has the amount of dividend per share grown over the past?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Lum Chang Holdings pass our checks?
The company currently pays out 28% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is 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 assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. 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.
Relative to peers, Lum Chang Holdings has a yield of 5.3%, which is high for Construction stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Lum Chang Holdings from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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. There are three pertinent aspects you should further research: