2 Days Left To Li & Fung Limited (HKG:494)’s Ex-Dividend Date, Is It Worth Buying?
On the 18 September 2018, Li & Fung Limited (HKG:494) will be paying shareholders an upcoming dividend amount of US$0.03 per share. However, investors must have bought the company’s stock before 04 September 2018 in order to qualify for the payment. That means you have only 2 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Li & Fung can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
See our latest analysis for Li & Fung
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Does it pay an annual yield higher than 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 have the ability to keep paying its dividends going forward?
How does Li & Fung fare?
The current trailing twelve-month payout ratio for the stock is 43.8%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 64.4%, leading to a dividend yield of around 6.2%. In addition to this, EPS should increase to $0.017. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from Li & Fung have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, Li & Fung generates a yield of 5.8%, which is high for Luxury stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Li & Fung as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. There are three essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for 494’s future growth? Take a look at our free research report of analyst consensus for 494’s outlook.
Valuation: What is 494 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 494 is currently mispriced by the market.
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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
