On the 17 July 2018, Huaneng Power International Inc (SEHK:902) will be paying shareholders an upcoming dividend amount of CN¥0.1 per share. However, investors must have bought the company’s stock before 09 May 2018 in order to qualify for the payment. That means you have only 6 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Huaneng Power International’s latest financial data to analyse its dividend attributes. View our latest analysis for Huaneng Power International
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Huaneng Power International fit our criteria?
The company currently pays out 65.17% 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 902’s payout to increase to 74.58% of its earnings, which leads to a dividend yield of 6.51%. Furthermore, EPS should increase to CN¥0.31. 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. Not only have dividend payouts from Huaneng Power International fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. In terms of its peers, Huaneng Power International has a yield of 2.37%, which is on the low-side for Renewable Energy stocks.
Taking all the above into account, Huaneng Power International is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 relevant factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for 902’s future growth? Take a look at our free research report of analyst consensus for 902’s outlook.
- Valuation: What is 902 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 902 is currently mispriced by the market.
- 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.