AAC Technologies Holdings Inc (HKG:2018) has pleased shareholders over the past 10 years, by paying out dividends. The company currently pays out a dividend yield of 3.7% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at AAC Technologies Holdings in more detail.
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased 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?
How does AAC Technologies Holdings fare?
The current trailing twelve-month payout ratio for the stock is 47%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 37%, leading to a dividend yield of 3.1%. However, EPS should increase to CN¥3.9, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 2018 has increased its DPS from CN¥0.096 to CN¥1.82 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes 2018 a true dividend rockstar.
Relative to peers, AAC Technologies Holdings has a yield of 3.7%, which is high for Electronic stocks but still below the market’s top dividend payers.
Taking into account the dividend metrics, AAC Technologies Holdings ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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 2018’s future growth? Take a look at our free research report of analyst consensus for 2018’s outlook.
- Valuation: What is 2018 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 2018 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 firstname.lastname@example.org.