Yahoo Finance Is Tong Ren Tang Technologies Co Ltd (HKG:1666) A Great Dividend Stock?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, Tong Ren Tang Technologies Co Ltd (HKG:1666) has paid dividends to shareholders, and these days it yields 1.7%. Let’s dig deeper into whether Tong Ren Tang Technologies should have a place in your portfolio.
See our latest analysis for Tong Ren Tang Technologies
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?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Tong Ren Tang Technologies pass our checks?
The company currently pays out 31.9% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 30.2%, leading to a dividend yield of 1.9%. In addition to this, EPS should increase to CN¥0.59.
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. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of 1666 it has increased its DPS from CN¥0.075 to CN¥0.19 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes 1666 a true dividend rockstar.
Compared to its peers, Tong Ren Tang Technologies has a yield of 1.7%, which is high for Pharmaceuticals stocks but still below the low risk savings rate.
Next Steps:
With this in mind, I definitely rank Tong Ren Tang Technologies 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 relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for 1666’s future growth? Take a look at our free research report of analyst consensus for 1666’s outlook.
Valuation: What is 1666 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 1666 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 editorial-team@simplywallst.com.
