Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, China Travel International Investment Hong Kong Limited (HKG:308) has paid dividends to shareholders, and these days it yields 3.9%. Let's dig deeper into whether China Travel International Investment Hong Kong should have a place in your portfolio.
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Does it pay an annual yield higher than 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?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does China Travel International Investment Hong Kong fit our criteria?
The current trailing twelve-month payout ratio for the stock is 40%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 43% which, assuming the share price stays the same, leads to a dividend yield of 4.6%. Moreover, EPS is forecasted to fall to HK$0.18 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. Although 308's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, China Travel International Investment Hong Kong has a yield of 3.9%, which is high for Hospitality stocks but still below the market's top dividend payers.
With these dividend metrics in mind, I definitely rank China Travel International Investment Hong Kong 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, 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 pertinent factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for 308’s future growth? Take a look at our free research report of analyst consensus for 308’s outlook.
- Valuation: What is 308 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 308 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.
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Simply Wall St has no position in any of the companies mentioned. This article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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