Wasion Holdings Limited (HKG:3393) Is A Real Dividend Rock Star - Here Is Why

March 10, 2019
  •  Updated
August 08, 2022
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If you are an income investor, then Wasion Holdings Limited (HKG:3393) should be on your radar. Wasion Holdings Limited, an investment holding company, researches, develops, produces, and sells energy metering and energy efficiency management for energy supply industries in the People’s Republic of China and internationally. Over the past 10 years, the HK$4.0b market cap company has been growing its dividend payments, from CN¥0.084 to CN¥0.19. Currently yielding 5.7%, let's take a closer look at Wasion Holdings's dividend profile.

See our latest analysis for Wasion Holdings

What Is A Dividend Rock Star?

It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:

  • It is paying an annual yield above 75% of dividend payers
  • It has paid dividend every year without dramatically reducing payout in the past
  • Its dividend per share amount has increased over the past
  • It can afford to pay the current rate of dividends from its earnings
  • It has the ability to keep paying its dividends going forward

High Yield And Dependable

The company's dividend yield stands at 5.7%, which is high for Electronic stocks. But the real reason Wasion Holdings stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.

SEHK:3393 Historical Dividend Yield, March 10th 2019
SEHK:3393 Historical Dividend Yield, March 10th 2019

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. In the case of 3393 it has increased its DPS from CN¥0.084 to CN¥0.19 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes 3393 a true dividend rockstar.

The company currently pays out 72% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect 3393's payout to fall to 62% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 6.6%. However, EPS should increase to CN¥0.33, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

Next Steps:

Wasion Holdings's strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three pertinent aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 3393’s future growth? Take a look at our free research report of analyst consensus for 3393’s outlook.
  2. Valuation: What is 3393 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 3393 is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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