Attention dividend hunters! Good Friend International Holdings Inc (HKG:2398) will be distributing its dividend of CN¥0.058 per share on the 25 October 2018, and will start trading ex-dividend in 4 days time on the 28 September 2018. Is this future income a persuasive enough catalyst for investors to think about Good Friend International Holdings as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for Good Friend International Holdings
5 checks you should do on a dividend stock
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 consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount 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 the company be able to keep paying dividend based on the future earnings growth?
Does Good Friend International Holdings pass our checks?
The company currently pays out 89.6% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently 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.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Not only have dividend payouts from Good Friend International Holdings fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, Good Friend International Holdings produces a yield of 6.3%, which is high for Machinery stocks.
Next Steps:
Taking all the above into account, Good Friend International Holdings is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, 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. There are three essential factors you should look at: