Yue Yuen Industrial (Holdings) Limited (HKG:551) has pleased shareholders over the past 10 years, by paying out dividends. The company currently pays out a dividend yield of 6.5% to shareholders, making it a relatively attractive dividend stock. Let’s dig deeper into whether Yue Yuen Industrial (Holdings) should have a place in your portfolio.
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Yue Yuen Industrial (Holdings) pass our checks?
Yue Yuen Industrial (Holdings) has a trailing twelve-month payout ratio of 77%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 551’s payout to remain around the same level at 71% of its earnings, which leads to a dividend yield of 6.4%. Moreover, EPS is forecasted to fall to $0.25 in the upcoming year.
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. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. In the case of 551 it has increased its DPS from $0.11 to $0.19 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.
Relative to peers, Yue Yuen Industrial (Holdings) produces a yield of 6.5%, which is high for Luxury stocks.
Keeping in mind the dividend characteristics above, Yue Yuen Industrial (Holdings) is definitely worth considering for investors looking to build a dedicated income portfolio. 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 aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 551’s future growth? Take a look at our free research report of analyst consensus for 551’s outlook.
- Valuation: What is 551 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 551 is currently mispriced by the market.
- Other 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 email@example.com.