Is Sa Sa International Holdings Limited (HKG:178) An Attractive Dividend Stock?
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Sa Sa International Holdings Limited (HKG:178) has paid dividends to shareholders, and these days it yields 4.9%. Should it have a place in your portfolio? Let’s take a look at Sa Sa International Holdings in more detail.
Check out our latest analysis for Sa Sa International Holdings
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
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?
Is is able 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 well does Sa Sa International Holdings fit our criteria?
The current trailing twelve-month payout ratio for 178 is 100%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a payout ratio of 93%, which, assuming the share price stays the same, leads to a dividend yield of around 6.9%. Furthermore, EPS should increase to HK$0.21.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 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, Sa Sa International Holdings produces a yield of 4.9%, which is on the low-side for Specialty Retail stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Sa Sa International Holdings for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three fundamental factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for 178’s future growth? Take a look at our free research report of analyst consensus for 178’s outlook.
Valuation: What is 178 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 178 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 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.
