What To Know Before Buying Want Want China Holdings Limited (HKG:151) For Its Dividend
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Want Want China Holdings Limited (HKG:151) has paid a dividend to shareholders. It currently yields 2.3%. Does Want Want China Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Want Want China Holdings
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Want Want China Holdings pass our checks?
The current trailing twelve-month payout ratio for the stock is 37.8%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 55.0%, leading to a dividend yield of 3.2%. Moreover, EPS should increase to CN¥0.29. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering 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.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Want Want China Holdings has a yield of 2.3%, which is on the low-side for Food stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Want Want China Holdings as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for 151’s future growth? Take a look at our free research report of analyst consensus for 151’s outlook.
Valuation: What is 151 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 151 is currently mispriced by the market.
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 editorial-team@simplywallst.com.
