Why Dividend Hunters Love CK Infrastructure Holdings Limited (HKG:1038)

Over the past 10 years CK Infrastructure Holdings Limited (HKG:1038) has been paying dividends to shareholders. The company currently pays out a dividend yield of 3.6% to shareholders, making it a relatively attractive dividend stock. Does CK Infrastructure Holdings tick all the boxes of a great dividend stock? Below, I'll take you through my analysis.

Check out our latest analysis for CK Infrastructure Holdings

5 checks you should do on a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it the top 25% annual dividend yield payer?
• 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?
• Can it afford to pay the current rate of dividends from its earnings?
• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How well does CK Infrastructure Holdings fit our criteria?

The current trailing twelve-month payout ratio for the stock is 57%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 56% which, assuming the share price stays the same, leads to a dividend yield of 4.1%. Moreover, EPS should increase to HK$4.56.

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. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. In the case of 1038 it has increased its DPS from HK$1.14 to HK$2.38 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 1038 a true dividend rockstar.

In terms of its peers, CK Infrastructure Holdings generates a yield of 3.6%, which is on the low-side for Electric Utilities stocks.

Next Steps:

Considering the dividend attributes we analyzed above, CK Infrastructure Holdings is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. Below, I've compiled three fundamental factors you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for 1038’s future growth? Take a look at our free research report of analyst consensus for 1038’s outlook.
2. Valuation: What is 1038 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 1038 is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger 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.