Only 4 Days Left To AIA Group Limited (HKG:1299)’s Ex-Dividend Date, Should Investors Buy?

Investors who want to cash in on AIA Group Limited’s (HKG:1299) upcoming dividend of US$0.29 per share have only 4 days left to buy the shares before its ex-dividend date, 10 September 2018, in time for dividends payable on the 28 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine AIA Group’s latest financial data to analyse its dividend characteristics.

View our latest analysis for AIA Group

5 checks you should use to assess a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• 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 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?

SEHK:1299 Historical Dividend Yield September 5th 18

How does AIA Group fare?

The current trailing twelve-month payout ratio for the stock is 25.1%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 1299’s payout to increase to 32.5% of its earnings, which leads to a dividend yield of around 2.1%. However, EPS is forecasted to fall to $0.45 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

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 AIA Group as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, AIA Group generates a yield of 1.5%, which is on the low-side for Insurance stocks.

Next Steps:

After digging a little deeper into AIA Group’s yield, it’s easy to see why you should be cautious investing in the company just 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, 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 fundamental aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for 1299’s future growth? Take a look at our free research report of analyst consensus for 1299’s outlook.

2. Valuation: What is 1299 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 1299 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.

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 editorial-team@simplywallst.com.