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Over the past 10 years Wasion Holdings Limited (HKG:3393) has been paying dividends to shareholders. The company currently pays out a dividend yield of 5.5% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at Wasion Holdings in more detail.
Check out our latest analysis for Wasion Holdings
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it paying an annual yield above 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has the amount of dividend per share grown over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does Wasion Holdings fare?
Wasion Holdings has a trailing twelve-month payout ratio of 72%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect 3393’s payout to fall to 62% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 6.4%. However, EPS should increase to CN¥0.33, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. In the case of 3393 it has increased its DPS from CN¥0.084 to CN¥0.19 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Wasion Holdings generates a yield of 5.5%, which is high for Electronic stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Wasion Holdings is definitely worth considering for investors looking to build a dedicated income portfolio. 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 pertinent factors you should further research: