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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Southeast Asia Properties & Finance Limited (HKG:252) has paid a dividend to shareholders. It currently yields 1.3%. Does Southeast Asia Properties & Finance tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.

See our latest analysis for Southeast Asia Properties & Finance

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:

• Is it the top 25% annual dividend yield payer?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

Does Southeast Asia Properties & Finance pass our checks?

Southeast Asia Properties & Finance has a trailing twelve-month payout ratio of 15%, 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 considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

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. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

Compared to its peers, Southeast Asia Properties & Finance produces a yield of 1.3%, which is on the low-side for Packaging stocks.

Next Steps:

After digging a little deeper into Southeast Asia Properties & Finance’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. Below, I’ve compiled three important aspects you should further examine: