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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 3 years Colour Life Services Group Co Limited (SEHK:1778) has returned an average of 2.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Colour Life Services Group should have a place in your portfolio. View our latest analysis for Colour Life Services Group
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has the amount of dividend per share grown over the past?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
How does Colour Life Services Group fare?
The current trailing twelve-month payout ratio for the stock is 37.62%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 43.77%, leading to a dividend yield of 4.08%. Moreover, EPS should increase to CN¥0.41. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. 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 Colour Life Services Group as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Colour Life Services Group has a yield of 2.26%, which is on the low-side for Real Estate stocks.
Next Steps:
If Colour Life Services 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, 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 important factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for 1778’s future growth? Take a look at our free research report of analyst consensus for 1778’s outlook.
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Valuation: What is 1778 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 1778 is currently mispriced by the market.
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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.