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Is Cordlife Group Limited (SGX:P8A) An Attractive Dividend Stock?

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Cordlife Group Limited (SGX:P8A) has paid a dividend to shareholders. It currently yields 3.0%. Does Cordlife Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.

Check out our latest analysis for Cordlife Group

Here’s how I find good dividend stocks

If you are a dividend investor, you should always assess these five key metrics:

  • Is their annual yield among the top 25% of dividend payers?

  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?

  • Has the amount of dividend per share grown over the past?

  • Can it afford 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?

SGX:P8A Historical Dividend Yield, March 7th 2019
SGX:P8A Historical Dividend Yield, March 7th 2019

How does Cordlife Group fare?

Cordlife Group has a trailing twelve-month payout ratio of 55%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Cordlife Group as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, Cordlife Group has a yield of 3.0%, which is high for Healthcare stocks but still below the market’s top dividend payers.

Next Steps:

After digging a little deeper into Cordlife Group’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. Below, I’ve compiled three important aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for P8A’s future growth? Take a look at our free research report of analyst consensus for P8A’s outlook.

  2. Valuation: What is P8A 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 P8A is currently mispriced by the market.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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