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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. In the past 2 years Modern Dental Group Limited (SEHK:3600) has returned an average of 2.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at Modern Dental Group in more detail. See our latest analysis for Modern Dental Group
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is its annual yield among the top 25% of dividend-paying companies?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has the amount of dividend per share grown over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How does Modern Dental Group fare?
The current trailing twelve-month payout ratio for the stock is 29.49%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 3600’s payout to remain around the same level at 29.94% of its earnings, which leads to a dividend yield of 3.20%. Furthermore, EPS should increase to HK$0.21. 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. The reality is that it is too early to consider Modern Dental Group as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Modern Dental Group generates a yield of 2.05%, which is high for Medical Equipment stocks but still below the market’s top dividend payers.
Next Steps:
If Modern Dental Group is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant factors you should further research:
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Future Outlook: What are well-informed industry analysts predicting for 3600’s future growth? Take a look at our free research report of analyst consensus for 3600’s outlook.
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Historical Performance: What has 3600’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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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.