Dividend Hunters Should Consider China CITIC Bank Corporation Limited (HKG:998), With A 6.1% Yield
Over the past 10 years China CITIC Bank Corporation Limited (HKG:998) has grown its dividend payouts from CN¥0.053 to CN¥0.26. With a market cap of HK$298b, China CITIC Bank pays out 30% of its earnings, leading to a 6.1% yield. Let me elaborate on you why the stock stands out for income investors like myself.
Check out our latest analysis for China CITIC Bank
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What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
It is paying an annual yield above 75% of dividend payers
It consistently pays out dividend without missing a payment or significantly cutting payout
Its has increased its dividend per share amount over the past
It is able to pay the current rate of dividends from its earnings
It has the ability to keep paying its dividends going forward
High Yield And Dependable
The company’s dividend yield stands at 6.1%, which is high for Banks stocks. But the real reason China CITIC Bank stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
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. In the case of 998 it has increased its DPS from CN¥0.053 to CN¥0.26 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
The company currently pays out 30% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 21% which, assuming the share price stays the same, leads to a dividend yield of 6.7%. However, EPS should increase to CN¥0.94, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Next Steps:
With China CITIC Bank producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a top dividend generator moving forward. However, given 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 examine:
Future Outlook: What are well-informed industry analysts predicting for 998’s future growth? Take a look at our free research report of analyst consensus for 998’s outlook.
Valuation: What is 998 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 998 is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better 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.
