China Construction Bank Corporation (SEHK:939) has pleased shareholders over the past 10 years, paying out an average dividend of 4.00% annually. The company currently pays out a dividend yield of 3.91% to shareholders, making it a relatively attractive dividend stock. Let’s dig deeper into whether China Construction Bank should have a place in your portfolio. See our latest analysis for China Construction Bank
5 questions to ask before buying 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 payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has the amount of dividend per share grown over the past?
- Is it able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does China Construction Bank fit our criteria?
China Construction Bank has a trailing twelve-month payout ratio of 29.49%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 29.93%, leading to a dividend yield of 5.08%. In addition to this, EPS should increase to CN¥1.02. 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. Although 939’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, China Construction Bank generates a yield of 3.91%, which is on the low-side for Banks stocks.
Keeping in mind the dividend characteristics above, China Construction Bank is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for 939’s future growth? Take a look at our free research report of analyst consensus for 939’s outlook.
- Valuation: What is 939 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 939 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 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.