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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. Historically, Hotel Grand Central Limited (SGX:H18) has been paying a dividend to shareholders. Today it yields 2.9%. Should it have a place in your portfolio? Let's take a look at Hotel Grand Central in more detail.
See our latest analysis for Hotel Grand Central
Here's how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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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 Hotel Grand Central fare?
The company currently pays out 103% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-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.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Hotel Grand Central generates a yield of 2.9%, which is high for Hospitality stocks but still below the market's top dividend payers.
Next Steps:
After digging a little deeper into Hotel Grand Central's yield, it's easy to see why you should be cautious investing in the company just 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three important aspects you should look at: