Yahoo Finance Should Melbourne Enterprises Limited (HKG:158) Be Part Of Your Dividend Portfolio?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Melbourne Enterprises Limited (HKG:158) has paid dividends to shareholders, and these days it yields 2.6%. Does Melbourne Enterprises tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Melbourne Enterprises
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5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it paying an annual yield above 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
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?
How does Melbourne Enterprises fare?
The company currently pays out 5.5% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
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 158 it has increased its DPS from HK$2.9 to HK$5.1 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes 158 a true dividend rockstar.
Compared to its peers, Melbourne Enterprises generates a yield of 2.6%, which is on the low-side for Real Estate stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Melbourne Enterprises is definitely worth considering for investors looking to build a dedicated income portfolio. Given that 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. There are three essential aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for 158’s future growth? Take a look at our free research report of analyst consensus for 158’s outlook.
Valuation: What is 158 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 158 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 editorial-team@simplywallst.com.
