In This Article:
Important news for shareholders and potential investors in Tao Heung Holdings Limited (HKG:573): The dividend payment of HK$0.055 per share will be distributed to shareholders on 10 October 2018, and the stock will begin trading ex-dividend at an earlier date, 27 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Tao Heung Holdings’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for Tao Heung Holdings
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
-
Is it paying an annual yield above 75% of dividend payers?
-
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
-
Has the amount of dividend per share grown over the past?
-
Does earnings amply cover its dividend payments?
-
Will it be able to continue to payout at the current rate in the future?
How does Tao Heung Holdings fare?
The company currently pays out 117% 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 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 Tao Heung Holdings fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Compared to its peers, Tao Heung Holdings has a yield of 7.9%, which is high for Hospitality stocks.
Next Steps:
After digging a little deeper into Tao Heung Holdings’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, 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. Below, I’ve compiled three pertinent factors you should further research: