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Have you been keeping an eye on Swire Pacific Limited’s (HKG:19) upcoming dividend of HK$1.20 per share payable on the 05 October 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 05 September 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Swire Pacific can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

View our latest analysis for Swire Pacific

5 questions I ask before picking a dividend stock

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

• Does it pay an annual yield higher than 75% of dividend payers?

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

• 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?

Does Swire Pacific pass our checks?

Swire Pacific has a trailing twelve-month payout ratio of 12.6%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 19’s payout to increase to 52.0% of its earnings, which leads to a dividend yield of 3.4%. However, EPS is forecasted to fall to HK$6.67 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

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. Not only have dividend payouts from Swire Pacific fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

In terms of its peers, Swire Pacific has a yield of 2.4%, which is on the low-side for Real Estate stocks.

Next Steps:

Taking all the above into account, Swire Pacific is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important factors you should further research: