Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. China Maple Leaf Educational Systems Limited (HKG:1317) has paid a dividend to shareholders in the last few years. It currently yields 2.7%. Should it have a place in your portfolio? Let’s take a look at China Maple Leaf Educational Systems in more detail.
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Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- 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 the company be able to keep paying dividend based on the future earnings growth?
How does China Maple Leaf Educational Systems fare?
The company currently pays out 41% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect 1317’s payout to remain around the same level at 40% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 3.8%. Moreover, EPS should increase to CN¥0.22.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider China Maple Leaf Educational Systems as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, China Maple Leaf Educational Systems generates a yield of 2.7%, which is on the low-side for Consumer Services stocks.
Taking all the above into account, China Maple Leaf Educational Systems is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer 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. Below, I’ve compiled three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 1317’s future growth? Take a look at our free research report of analyst consensus for 1317’s outlook.
- Valuation: What is 1317 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 1317 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.
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 firstname.lastname@example.org.