A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Thai Beverage Public Company Limited (SGX:Y92) has paid a dividend to shareholders. It currently yields 4.3%. Does Thai Beverage tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How does Thai Beverage fare?
The current trailing twelve-month payout ratio for the stock is 77%, which means that the dividend is covered by earnings. However, going forward, analysts expect Y92’s payout to fall to 53% of its earnings, which leads to a dividend yield of around 3.6%. However, EPS should increase to ฿0.96, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Although Y92’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Thai Beverage produces a yield of 4.3%, which is high for Beverage stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank Thai Beverage 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three pertinent aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for Y92’s future growth? Take a look at our free research report of analyst consensus for Y92’s outlook.
- Valuation: What is Y92 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 Y92 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 email@example.com.