Over the past 10 years China Telecom Corporation Limited (SEHK:728) has returned an average of 2.00% per year from dividend payouts. The company currently pays out a dividend yield of 3.04% to shareholders, making it a relatively attractive dividend stock. Let’s dig deeper into whether China Telecom should have a place in your portfolio. View our latest analysis for China Telecom
5 checks you should use to assess a dividend stock
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?
- Does it consistently pay out dividends without missing a payment or significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does China Telecom fare?
China Telecom has a trailing twelve-month payout ratio of 41.63%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 41.05%, leading to a dividend yield of around 3.62%. Moreover, EPS should increase to CN¥0.25. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of 728 it has increased its DPS from CN¥0.09 to CN¥0.11 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, China Telecom produces a yield of 3.04%, which is high for Telecom stocks but still below the market’s top dividend payers.
With these dividend metrics in mind, I definitely rank China Telecom as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. Below, I’ve compiled three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 728’s future growth? Take a look at our free research report of analyst consensus for 728’s outlook.
- Valuation: What is 728 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 728 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 pass 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.