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Attention dividend hunters! Sinopec Kantons Holdings Limited (HKG:934) will be distributing its dividend of HK$0.05 per share on the 18 October 2018, and will start trading ex-dividend in 4 days time on the 13 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Sinopec Kantons Holdings’s latest financial data to analyse its dividend attributes.
View our latest analysis for Sinopec Kantons Holdings
5 checks you should use to assess 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 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 well does Sinopec Kantons Holdings fit our criteria?
The company currently pays out 23.7% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect 934’s payout to increase to 28.3% of its earnings, which leads to a dividend yield of 4.5%. Furthermore, EPS should increase to HK$0.58. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. 934 has increased its DPS from HK$0.035 to HK$0.14 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Sinopec Kantons Holdings generates a yield of 4.1%, which is on the low-side for Oil and Gas stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Sinopec Kantons Holdings as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three relevant aspects you should further research: