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If you are interested in cashing in on Dongfeng Motor Group Company Limited’s (HKG:489) upcoming dividend of CN¥0.10 per share, you only have 4 days left to buy the shares before its ex-dividend date, 11 September 2018, in time for dividends payable on the 31 October 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Dongfeng Motor Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

See our latest analysis for Dongfeng Motor Group

5 checks you should do on a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is their annual yield among the top 25% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has the amount of dividend per share grown over the past?

• 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 Dongfeng Motor Group pass our checks?

Dongfeng Motor Group has a trailing twelve-month payout ratio of 20.0%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 489’s payout to remain around the same level at 19.0% of its earnings, which leads to a dividend yield of around 4.5%. In addition to this, EPS is forecasted to fall to CN¥1.67 in the upcoming year.

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. Although 489’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, Dongfeng Motor Group has a yield of 4.9%, which is high for Auto stocks but still below the market’s top dividend payers.

Next Steps:

Considering the dividend attributes we analyzed above, Dongfeng Motor Group is definitely worth keeping an eye on for someone looking to build a dedicated income 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. I’ve put together three pertinent factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 489’s future growth? Take a look at our free research report of analyst consensus for 489’s outlook.

2. Historical Performance: What has 489’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.

3. 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.