Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 2 years, Lanzhou Zhuangyuan Pasture Co Ltd (HKG:1533) has returned an average of 1.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Lanzhou Zhuangyuan Pasture in more detail.
Check out our latest analysis for Lanzhou Zhuangyuan Pasture
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it the top 25% annual dividend yield payer?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has it increased its dividend per share amount over the past?
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Is is able 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 well does Lanzhou Zhuangyuan Pasture fit our criteria?
The current trailing twelve-month payout ratio for the stock is 17.49%, which means that the dividend is covered by 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.
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. Unfortunately, it is really too early to view Lanzhou Zhuangyuan Pasture 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.
In terms of its peers, Lanzhou Zhuangyuan Pasture produces a yield of 1.16%, which is on the low-side for Food stocks.
Next Steps:
After digging a little deeper into Lanzhou Zhuangyuan Pasture’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering 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. There are three fundamental factors you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for 1533’s future growth? Take a look at our free research report of analyst consensus for 1533’s outlook.
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Historical Performance: What has 1533’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 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.