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If you are interested in cashing in on Yangtze Optical Fibre And Cable Joint Stock Limited Company’s (HKG:6869) upcoming dividend of CN¥0.50 per share, you only have 3 days left to buy the shares before its ex-dividend date, 25 October 2018, in time for dividends payable on the 12 December 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Yangtze Optical Fibre And Cable Limited’s latest financial data to analyse its dividend attributes.
See our latest analysis for Yangtze Optical Fibre And Cable Limited
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it the top 25% annual dividend yield payer?
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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 have the ability to keep paying its dividends going forward?
How well does Yangtze Optical Fibre And Cable Limited fit our criteria?
The current trailing twelve-month payout ratio for the stock is 22%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 27%, leading to a dividend yield of around 4.6%. In addition to this, EPS should increase to CN¥2.49. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. 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. Unfortunately, it is really too early to view Yangtze Optical Fibre And Cable Limited as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Yangtze Optical Fibre And Cable Limited generates a yield of 5.4%, which is high for Communications stocks but still below the market’s top dividend payers.
Next Steps:
Taking all the above into account, Yangtze Optical Fibre And Cable Limited 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, 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. I’ve put together three key factors you should further examine: