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If you are interested in cashing in on Tradelink Electronic Commerce Limited’s (SEHK:536) upcoming dividend of HK$0.06 per share, you only have 2 days left to buy the shares before its ex-dividend date, 15 May 2018, in time for dividends payable on the 30 May 2018. Is this future income a persuasive enough catalyst for investors to think about Tradelink Electronic Commerce as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for Tradelink Electronic Commerce

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it paying an annual yield above 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has it increased its dividend per share amount over the past?

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

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How well does Tradelink Electronic Commerce fit our criteria?

Tradelink Electronic Commerce has a trailing twelve-month payout ratio of 101.84%, which means that the dividend is not well-covered by its 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. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Not only have dividend payouts from Tradelink Electronic Commerce 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. Compared to its peers, Tradelink Electronic Commerce produces a yield of 6.93%, which is high for IT stocks.

Next Steps:

After digging a little deeper into Tradelink Electronic Commerce’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. I’ve put together three essential factors you should further examine: