A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 5 years, Huadian Fuxin Energy Corporation Limited (HKG:816) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Huadian Fuxin Energy should have a place in your portfolio. View out our latest analysis for Huadian Fuxin Energy
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Huadian Fuxin Energy fit our criteria?
Huadian Fuxin Energy has a trailing twelve-month payout ratio of 21.87%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 23.02%, leading to a dividend yield of 4.86%. Moreover, EPS should increase to CN¥0.31.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Huadian Fuxin Energy as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Huadian Fuxin Energy has a yield of 3.52%, which is high for Renewable Energy stocks but still below the market’s top dividend payers.
If Huadian Fuxin Energy is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 816’s future growth? Take a look at our free research report of analyst consensus for 816’s outlook.
- Valuation: What is 816 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 816 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 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.