Okay, Hong Kong. This will be quick. (Quite bitter with what happened to my investments there recently).
I’ll use the top yields website and pick the top four dividend yielding companies. (http://www.topyields.nl/)
Remember: this is not how you should start researching for a worthy stock investment, but it helps to get a general ‘feel’ on how a limited group (4) companies in a foreign exchange is performing in terms of their annual/quarterly payouts.
If you have skipped my previous brief explanation about dividends, I suggest you open a new tab with the Part 3 Link.
I’ve written this on 9/26/2015.
I pick Sands China (HK:1928), China Shenhua Energy (HK:1088), HSBC Holdings (HK:0005), and China National Offshore Oil Corp (CNOOC, HK:00883).
Well, this is challenging, Hang Seng Index list their stocks with numbers. I found it hard initially especially when using a Skype account and calling to a Chinese broker there in Hong Kong and making sure that we are buying the right shares of the company interested. (I am also Chinese by the way, so some do get the choppy accent and some don’t).
But for simplicity, we’ll keep on using the company’s name instead of the ticker.
Dividend Payout Ratio. This is how much a company gives back to its shareholders from their earnings. There are two ways to get this value. First, dividend per share over earnings per share. The other is retrieving the total amount of dividend provided and divide it with the company’s net income. I’ll use the latter. I prefer this number to be <80%.
It appears that only China Shenhua Energy did not meet the criteria.
Nice to know information: China Shenhua Energy paid an amount of 40,077 million CNY or 6,286 million USD. For simplicity, I’ll convert all CNY to USD from here. While the bank HSBC gave 8,079 million USD. In short, it does not matter how huge a company is providing dividend as long as its reasonable. The lesser, the better in this case.
Dividend computed annual growth rate (CAGR; Past 5 years). As an investor, I want to put my money where a company can grow its dividend consistently and has a previous track record. There are only a few (I think) companies in the Philippines who are able to do this when compared to stocks in the U.S. or Canada.
For example, Coke Cola (KO) has been giving dividends year in and year out, recessions, booms and bust, for 52 consecutive years. Royal Bank of Canada (RY) has been paying dividends to its loyal shareholders since 1870’s. Over time, their dividends had grown.
Wew, no growth from Sands China and negative growth for CNOOC. China Shenhua shines through, but its dividend payout ratio shows signs of instability.
Debt to equity ratio (D/E). Yes, we see this again. I personally require DE to be seen most of the time in several of my metrics. I would require <0.5. the lesser, the better.
Only Sands China had flunk this screen. Interestingly, I own lots of Sands China (approximately 15% of my Hong Kong portfolio).
Nice to know information: Sands China has a total debt of 3,372 million USD at present, while CNOOC has 23,287 million USD.
I do suggest a deeper historical performance review of any company (including revenue, operating margins, return on invested capital, etc.) that may be interesting for you to invest. We know historical performance does not guarantee future developments, but it is worth knowing where the company has been with its financial performance. (and not just chart prices)
Okay, I guess we’ll stop here. If you are interested in learning about companies giving dividends in the Philippines or India, click on the next parts of this blog.
A quote to go by
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” – John D. Rockefeller
Disclosure: I have shares in Sands China, but don’t plan to initiate purchase within the next 24 hours. I would not receive any compensation for doing this article. I am not a professional financial analyst. This is just a hobby. Lastly, my work is not error-free, but I strive for it to be. Do not consider as a buy or sell advice. Invest at your own risk.
If you are interested in this similar approach to investing and would seek updates, I wish to invite you to this Facebook group SEEKING VALUE (https://www.facebook.com/groups/SeekingValue/?ref=bookmarks)
Part 1: Which Company Shares I Should Buy, Now that the Fed Kept Rates Unchanged?
Part 2: S&P500, Philippine Stock Market, Hong Kong, India, and the Fed Funds Rate.
Part 3: In the Philippines, Which Company has a Good Recent Performance of Handing out Dividends.
Part 5: In India, Which Company has a Good Recent Performance of Handing out Dividends.