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A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, Powerlong Real Estate Holdings Limited (HKG:1238) has been paying a dividend to shareholders. Today it yields 6.2%. Let’s dig deeper into whether Powerlong Real Estate Holdings should have a place in your portfolio.
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Powerlong Real Estate Holdings pass our checks?
Powerlong Real Estate Holdings has a trailing twelve-month payout ratio of 27%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 25% which, assuming the share price stays the same, leads to a dividend yield of around 9.8%.
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 business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Powerlong Real Estate Holdings as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Powerlong Real Estate Holdings has a yield of 6.2%, which is high for Real Estate stocks.
Keeping in mind the dividend characteristics above, Powerlong Real Estate Holdings 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 important aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 1238’s future growth? Take a look at our free research report of analyst consensus for 1238’s outlook.
- Historical Performance: What has 1238’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.
- 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 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 firstname.lastname@example.org.