Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Hallenstein Glasson Holdings Limited (NZSE:HLG) has returned to shareholders over the past 10 years, an average dividend yield of 8.00% annually. Does Hallenstein Glasson Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Hallenstein Glasson Holdings
How I analyze 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 of significantly cutting payout?
-
Has the amount of dividend per share grown over the past?
-
Can it afford to pay the current rate of dividends from its earnings?
-
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Hallenstein Glasson Holdings pass our checks?
Hallenstein Glasson Holdings has a trailing twelve-month payout ratio of 108.80%, meaning the dividend is not sufficiently covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Hallenstein Glasson Holdings fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, Hallenstein Glasson Holdings produces a yield of 6.72%, which is high for Specialty Retail stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Hallenstein Glasson Holdings for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 pertinent factors you should further examine: