Sinopec Kantons Holdings Limited (HKG:934) Is An Attractive Dividend Stock, Here’s Why
There is a lot to be liked about Sinopec Kantons Holdings Limited (HKG:934) as an income stock. It has paid dividends over the past 10 years. The company is currently worth HK$7.6b, and now yields roughly 4.6%. Should it have a place in your portfolio? Let’s take a look at Sinopec Kantons Holdings in more detail.
View our latest analysis for Sinopec Kantons Holdings
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
Does Sinopec Kantons Holdings pass our checks?
The company currently pays out 24% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 28%, leading to a dividend yield of around 5.1%. Furthermore, EPS should increase to HK$0.58. 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.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 934 has increased its DPS from HK$0.035 to HK$0.14 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes 934 a true dividend rockstar.
In terms of its peers, Sinopec Kantons Holdings generates a yield of 4.6%, which is on the low-side for Oil and Gas stocks.
Next Steps:
With this in mind, I definitely rank Sinopec Kantons Holdings as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. There are three essential aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for 934’s future growth? Take a look at our free research report of analyst consensus for 934’s outlook.
Valuation: What is 934 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 934 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.
