Is Yangzijiang Shipbuilding (Holdings) Ltd (SGX:BS6) A Smart Pick For Income Investors?

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 10 years, Yangzijiang Shipbuilding (Holdings) Ltd (SGX:BS6) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Does Yangzijiang Shipbuilding (Holdings) tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Yangzijiang Shipbuilding (Holdings)

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?

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

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will the company be able to keep paying dividend based on the future earnings growth?

SGX:BS6 Historical Dividend Yield Jun 6th 18

How does Yangzijiang Shipbuilding (Holdings) fare?

The current trailing twelve-month payout ratio for the stock is 29.98%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 33.77%, leading to a dividend yield of around 4.07%. However, EPS is forecasted to fall to CN¥0.58 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. Although BS6’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. In terms of its peers, Yangzijiang Shipbuilding (Holdings) generates a yield of 4.41%, which is high for Machinery stocks but still below the market’s top dividend payers.

Next Steps:

Taking into account the dividend metrics, Yangzijiang Shipbuilding (Holdings) ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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 essential factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for BS6’s future growth? Take a look at our free research report of analyst consensus for BS6’s outlook.

2. Valuation: What is BS6 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 BS6 is currently mispriced by the market.

3. 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 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.