Is Tsaker Chemical Group Limited (HKG:1986) A Strong Dividend Stock?
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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the last few years Tsaker Chemical Group Limited (HKG:1986) has paid a dividend to shareholders. Today it yields 2.4%. Let's dig deeper into whether Tsaker Chemical Group should have a place in your portfolio.
View our latest analysis for Tsaker Chemical Group
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Tsaker Chemical Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 30%, 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 thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Tsaker Chemical Group 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, Tsaker Chemical Group generates a yield of 2.4%, which is on the low-side for Chemicals stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Tsaker Chemical Group for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. I've put together three essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for 1986’s future growth? Take a look at our free research report of analyst consensus for 1986’s outlook.
Historical Performance: What has 1986'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.
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.
