Does Human Health Holdings Limited (HKG:1419) Have A Place In Your Dividend Stock Portfolio?

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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Human Health Holdings Limited (HKG:1419) has recently paid dividends to shareholders, and currently yields 1.9%. Does Human Health Holdings tick all the boxes of a great dividend stock? Below, I'll take you through my analysis.

See our latest analysis for Human Health Holdings

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it paying an annual yield above 75% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

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

How does Human Health Holdings fare?

Human Health Holdings has a trailing twelve-month payout ratio of 44%, which means that the dividend is 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.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

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. The reality is that it is too early to consider Human Health Holdings as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Relative to peers, Human Health Holdings produces a yield of 1.9%, which is on the low-side for Healthcare stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Human Health Holdings for the dividend. 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I've put together three pertinent factors you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for 1419’s future growth? Take a look at our free research report of analyst consensus for 1419’s outlook.

2. Valuation: What is 1419 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 1419 is currently mispriced by the market.

3. 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.