There is a lot to be liked about China Yuchai International Limited (NYSE:CYD) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The company currently pays out a dividend yield of 3.28% to shareholders, making it a relatively attractive dividend stock. Does China Yuchai International tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for China Yuchai International

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

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

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

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

• Does earnings amply cover its dividend payments?

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

How does China Yuchai International fare?

China Yuchai International has a trailing twelve-month payout ratio of 32.97%, which means that the dividend is covered by earnings. Going forward, analysts expect CYD’s payout to increase to 39.91% of its earnings, which leads to a dividend yield of around 4.61%. In addition to this, EPS should increase to CN¥19.07. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, China Yuchai International produces a yield of 3.28%, which is high for Machinery stocks.

Next Steps:

Taking into account the dividend metrics, China Yuchai International 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, 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 key aspects you should look at:

• 1. Future Outlook: What are well-informed industry analysts predicting for CYD’s future growth? Take a look at our free research report of analyst consensus for CYD’s outlook.

• 2. Valuation: What is CYD worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CYD is currently mispriced by the market.

• 3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.