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Know This Before Buying Vanke Property (Overseas) Limited (HKG:1036) For Its Dividend

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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Vanke Property (Overseas) Limited (HKG:1036) has paid dividends to shareholders, and these days it yields 1.8%. Should it have a place in your portfolio? Let’s take a look at Vanke Property (Overseas) in more detail.

View our latest analysis for Vanke Property (Overseas)

5 checks you should use to assess 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 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?

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

SEHK:1036 Historical Dividend Yield February 19th 19
SEHK:1036 Historical Dividend Yield February 19th 19

How well does Vanke Property (Overseas) fit our criteria?

The current trailing twelve-month payout ratio for the stock is 5.2%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

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. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

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. The reality facing 1036 investors is that whilst it has continued to pay shareholders dividend, dividends are lower today, than they were a decade ago. However, income investors that value stability over growth may still find 1036 appealing.

In terms of its peers, Vanke Property (Overseas) produces a yield of 1.8%, which is on the low-side for Real Estate stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Vanke Property (Overseas) 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. There are three essential factors you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for 1036’s future growth? Take a look at our free research report of analyst consensus for 1036’s outlook.

  2. Valuation: What is 1036 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 1036 is currently mispriced by the market.

  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.

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