A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time.
Historically, Cabbeen Fashion Limited (HKG:2030) has paid a dividend to shareholders. It currently yields 8.8%.
Let’s dig deeper into whether Cabbeen Fashion should have a place in your portfolio.
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Cabbeen Fashion fare?
The company currently pays out 50% 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.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow.
A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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.
Unfortunately, it is really too early to view
Cabbeen Fashion as a dividend investment.
It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers,
yield of 8.8%,
which is high for Luxury
If you are building an income portfolio, then Cabbeen Fashion is a complicated choice since it has some positive aspects as well as negative ones.
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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment.
- Future Outlook: What are well-informed industry analysts predicting for 2030’s future growth? Take a look at our free research report of analyst consensus for 2030’s outlook.
- Valuation: What is 2030 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 2030 is currently mispriced by the market.
- 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 email@example.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.
Daniel Loeb has achieved 16.2% annualized returns over the last 20 years. What is he holding today?
Founder of the event-driven, value-oriented hedge fund Third Point, Daniel Loeb is one of the most successful activist investors on the market today. Explore his portfolio’s top holdings, see how he diversifies his investments, past performance and growth estimates. Click here to view a FREE detailed infographic analysis of Daniel Loeb’s investment portfolio.