A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 10 years, Dongfeng Motor Group Company Limited (SEHK:489) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Dongfeng Motor Group in more detail. Check out our latest analysis for Dongfeng Motor Group
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Can it afford 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 Dongfeng Motor Group fare?
The current trailing twelve-month payout ratio for the stock is 20.85%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect 489’s payout to fall to 16.42% of its earnings, which leads to a dividend yield of around 3.53%. However, EPS should increase to CN¥1.6, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Dongfeng Motor Group has a yield of 2.43%, which is high for Auto stocks but still below the market’s top dividend payers.
Keeping in mind the dividend characteristics above, Dongfeng Motor Group is definitely worth considering for investors looking to build a dedicated income portfolio. 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. I’ve put together three essential factors you should further research:
- 1. Future Outlook: What are well-informed industry analysts predicting for 489’s future growth? Take a look at our free research report of analyst consensus for 489’s outlook.
- 2. Historical Performance: What has 489’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 3. 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.