Sun Hung Kai & Co Limited (HKG:86): Dividend Is Coming In 2 Days, Should You Buy?

Have you been keeping an eye on Sun Hung Kai & Co Limited’s (HKG:86) upcoming dividend of HK$0.12 per share payable on the 12 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 30 August 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Sun Hung Kai’s most recent financial data to examine its dividend characteristics in more detail.

View our latest analysis for Sun Hung Kai

5 questions to ask before buying a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

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

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it be able to continue to payout at the current rate in the future?

SEHK:86 Historical Dividend Yield August 27th 18

How well does Sun Hung Kai fit our criteria?

Sun Hung Kai has a trailing twelve-month payout ratio of 26.8%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 86’s payout to remain around the same level at 29.4% of its earnings, which leads to a dividend yield of 7.4%. In addition to this, EPS is forecasted to fall to HK$0.96 in the upcoming year.

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 Sun Hung Kai fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.

In terms of its peers, Sun Hung Kai has a yield of 5.8%, which is high for Consumer Finance stocks.

Next Steps:

Taking into account the dividend metrics, Sun Hung Kai ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. There are three key factors you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for 86’s future growth? Take a look at our free research report of analyst consensus for 86’s outlook.

2. Valuation: What is 86 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 86 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.

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.