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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. China VAST Industrial Urban Development Company Limited (HKG:6166) has paid a dividend to shareholders in the last few years. It currently yields 3.1%. Should it have a place in your portfolio? Let’s take a look at China VAST Industrial Urban Development in more detail.
View our latest analysis for China VAST Industrial Urban Development
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share risen in the past couple of years?
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Is is able to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does China VAST Industrial Urban Development fare?
China VAST Industrial Urban Development has a trailing twelve-month payout ratio of 30%, 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.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view China VAST Industrial Urban Development as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, China VAST Industrial Urban Development generates a yield of 3.1%, which is on the low-side for Real Estate stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in China VAST Industrial Urban Development 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. I’ve put together three relevant aspects you should further research: