Does BreadTalk Group Limited (SGX:CTN) Have A Place In Your Portfolio?

A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 10 years BreadTalk Group Limited (SGX:CTN) has returned an average of 2.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether BreadTalk Group should have a place in your portfolio. Check out our latest analysis for BreadTalk Group

5 checks you should do on a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it paying an annual yield above 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has it increased its dividend per share amount over the past?

• 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?

SGX:CTN Historical Dividend Yield June 21st 18

Does BreadTalk Group pass our checks?

The company currently pays out 92.11% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect CTN’s payout to fall into a more sustainable range of 65.69% of its earnings, which leads to a dividend yield of 2.50%. Moreover, EPS should increase to SGD0.033, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although CTN’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

Compared to its peers, BreadTalk Group produces a yield of 2.40%, which is on the low-side for Hospitality stocks.

Next Steps:

Taking all the above into account, BreadTalk Group 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 fundamental factors you should further examine:

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

2. Valuation: What is CTN 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 CTN 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 pass 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.