Investors who want to cash in on China Display Optoelectronics Technology Holdings Limited’s (HGK:334) upcoming dividend of CN¥0.040 per share have only 3 days left to buy the shares before its ex-dividend date, 12 June 2018, in time for dividends payable on the 27 July 2018. Is this future income a persuasive enough catalyst for investors to think about China Display Optoelectronics Technology 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. See our latest analysis for China Display Optoelectronics Technology Holdings
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does China Display Optoelectronics Technology Holdings fare?China Display Optoelectronics Technology Holdings has a trailing twelve-month payout ratio of 28.95%, which means that the dividend is covered by earnings. Going forward, analysts expect 334’s payout to remain around the same level at 28.09% of its earnings, which leads to a dividend yield of 4.06%. Furthermore, EPS should increase to CN¥0.066. 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. Unfortunately, it is really too early to view China Display Optoelectronics Technology Holdings as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record. In terms of its peers, China Display Optoelectronics Technology Holdings generates a yield of 2.78%, which is on the low-side for Tech stocks.
If China Display Optoelectronics Technology Holdings is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for 334’s future growth? Take a look at our free research report of analyst consensus for 334’s outlook.
- Valuation: What is 334 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 334 is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.