What To Know Before Buying CITIC Limited (HKG:267) For Its Dividend

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. CITIC Limited (HKG:267) has returned to shareholders over the past 10 years, an average dividend yield of 3.00% annually. Let’s dig deeper into whether CITIC should have a place in your portfolio. View out our latest analysis for CITIC

5 questions I ask before picking a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share risen in the past couple of years?

• 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?

SEHK:267 Historical Dividend Yield June 22nd 18

How well does CITIC fit our criteria?

The current trailing twelve-month payout ratio for the stock is 23.85%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 23.50%, leading to a dividend yield of 3.62%. In addition to this, EPS should increase to HK$1.65.

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. Not only have dividend payouts from CITIC fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

Compared to its peers, CITIC has a yield of 3.23%, which is on the low-side for Industrials stocks.

Next Steps:

Whilst there are few things you may like about CITIC from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, 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 fundamental factors you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for 267’s future growth? Take a look at our free research report of analyst consensus for 267’s outlook.

2. Historical Performance: What has 267’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

3. 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 pass 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.