Is Fu Shou Yuan International Group Limited (HKG:1448) A Strong Dividend Stock?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Fu Shou Yuan International Group Limited (HKG:1448) has recently paid dividends to shareholders, and currently yields 1.3%. Does Fu Shou Yuan International Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Fu Shou Yuan International Group
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five 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 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?
Does Fu Shou Yuan International Group pass our checks?
The company currently pays out 28% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect 1448’s payout to increase to 31% of its earnings. Assuming a constant share price, this equates to a dividend yield of 1.7%. Moreover, EPS should increase to CN¥0.25. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
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.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Fu Shou Yuan International Group as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Fu Shou Yuan International Group generates a yield of 1.3%, which is on the low-side for Consumer Services stocks.
Next Steps:
After digging a little deeper into Fu Shou Yuan International Group’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 key factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for 1448’s future growth? Take a look at our free research report of analyst consensus for 1448’s outlook.
Valuation: What is 1448 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 1448 is currently mispriced by the market.
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.
