Why Dividend Hunters Love China CITIC Bank Corporation Limited (HKG:998)
Over the past 10 years China CITIC Bank Corporation Limited (HKG:998) has been paying dividends to shareholders. The stock currently pays out a dividend yield of 5.8%, and has a market cap of HK$355b. Should it have a place in your portfolio? Let’s take a look at China CITIC Bank in more detail.
Check out our latest analysis for China CITIC Bank
Here’s how I find good dividend stocks
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 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 its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does China CITIC Bank pass our checks?
The current trailing twelve-month payout ratio for the stock is 30%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 21% which, assuming the share price stays the same, leads to a dividend yield of around 6.4%. However, EPS should increase to CN¥0.94, 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.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. 998 has increased its DPS from CN¥0.053 to CN¥0.26 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 998 a true dividend rockstar.
Compared to its peers, China CITIC Bank produces a yield of 5.8%, which is high for Banks stocks.
Next Steps:
With this in mind, I definitely rank China CITIC Bank 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 998’s future growth? Take a look at our free research report of analyst consensus for 998’s outlook.
Valuation: What is 998 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 998 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
