Should Chow Sang Sang Holdings International Limited (HKG:116) Be Part Of Your Dividend Portfolio?
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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Chow Sang Sang Holdings International Limited (HKG:116) has paid dividends to shareholders, and these days it yields 4.4%. Does Chow Sang Sang Holdings International tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Chow Sang Sang Holdings International
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
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 is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does Chow Sang Sang Holdings International fare?
Chow Sang Sang Holdings International has a trailing twelve-month payout ratio of 35%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 39% which, assuming the share price stays the same, leads to a dividend yield of around 5.7%. However, EPS is forecasted to fall to HK$1.59 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although 116’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.
In terms of its peers, Chow Sang Sang Holdings International has a yield of 4.4%, which is on the low-side for Specialty Retail stocks.
Next Steps:
Taking into account the dividend metrics, Chow Sang Sang Holdings 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, 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 pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for 116’s future growth? Take a look at our free research report of analyst consensus for 116’s outlook.
Valuation: What is 116 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 116 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.
