Shares of Value Partners Group Limited (SEHK:806) will begin trading ex-dividend in 3 days. To qualify for the dividend check of HK$0.18 per share, investors must have owned the shares prior to 02 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Value Partners Group’s latest financial data to analyse its dividend characteristics. See our latest analysis for Value Partners Group

5 checks you should do on a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is their annual yield among the top 25% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased over the past?

• Is it able to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

How does Value Partners Group fare?

The company currently pays out 15.97% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 806’s payout to increase to 48.48% of its earnings, which leads to a dividend yield of 4.81%. However, EPS is forecasted to fall to HK$0.56 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. Dividend payments from Value Partners Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Relative to peers, Value Partners Group generates a yield of 2.46%, which is on the low-side for Capital Markets stocks.

Next Steps:

If Value Partners Group is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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, 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 pertinent aspects you should look at: