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Shares of Xiwang Special Steel Company Limited (SEHK:1266) will begin trading ex-dividend in 2 days. To qualify for the dividend check of CN¥0.13 per share, investors must have owned the shares prior to 06 June 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Xiwang Special Steel can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Xiwang Special Steel

5 checks you should use to assess a dividend stock

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

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

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share risen in the past couple of years?

• Is its earnings sufficient to payout dividend at the current rate?

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

How well does Xiwang Special Steel fit our criteria?

The company currently pays out 29.45% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 32.61%, leading to a dividend yield of 13.97%. In addition to this, EPS should increase to CN¥0.52. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors 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. Unfortunately, it is really too early to view Xiwang Special Steel as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Xiwang Special Steel generates a yield of 8.98%, which is high for Metals and Mining stocks.

Next Steps:

Taking into account the dividend metrics, Xiwang Special Steel ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. Below, I’ve compiled three important factors you should look at: