【mounting block for ribbed metal siding】How Does Uni-President China Holdings Ltd (HKG:220) Fare As A Dividend Stock?

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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Uni-President China Holdings Ltd (

HKG:220

) has been paying a dividend to shareholders. Today it yields 2.4%. Should it have a place in your portfolio? Let’s take a look at Uni-President China Holdings in more detail.

See our latest analysis for Uni-President China Holdings

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

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

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

Will the company be able to keep paying dividend based on the future earnings growth?

SEHK:220 Historical Dividend Yield February 1st 19

Does Uni-President China Holdings pass our checks?

The current trailing twelve-month payout ratio for the stock is 60%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect 220’s payout to fall to 38% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.1%. However, EPS should increase to CN¥0.27, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

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 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.

Compared to its peers, Uni-President China Holdings produces a yield of 2.4%, which is on the low-side for Food stocks.

Next Steps:

With this in mind, I definitely rank Uni-President China Holdings as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 important factors you should further research:

Story continues

Future Outlook

: What are well-informed industry analysts predicting for 220’s future growth? Take a look at our

free research report of analyst consensus

for 220’s outlook.

Valuation

: What is 220 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 220 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

[email protected]

.

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