Have you been keeping an eye on Shanghai Industrial Holdings Limited’s (HKG:363) upcoming dividend of HK$0.48 per share payable on the 05 October 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 17 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Shanghai Industrial Holdings’s latest financial data to analyse its dividend characteristics.
See our latest analysis for Shanghai Industrial Holdings
Here’s how I find good dividend stocks
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 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?
-
Is is able to pay the current rate of dividends from its earnings?
-
Will it have the ability to keep paying its dividends going forward?
How does Shanghai Industrial Holdings fare?
Shanghai Industrial Holdings has a trailing twelve-month payout ratio of 29.7%, which means that the dividend is covered by earnings. Going forward, analysts expect 363’s payout to remain around the same level at 30.7% of its earnings, which leads to a dividend yield of around 5.8%. Moreover, EPS is forecasted to fall to HK$3.2 in the upcoming year.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. Although 363’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Shanghai Industrial Holdings has a yield of 5.5%, which is high for Industrials stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Shanghai Industrial Holdings is definitely worth considering for investors 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. I’ve put together three essential factors you should look at: