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Many investors rely on their investments to provide a steady stream of consistent and dependable dividend income. This not only acts as an additional passive income stream while one is working but if grown well, may also eventually supplement one’s active income.
In my years of investing, I’ve realised that one should study the sustainability of a dividend rather than merely chasing after companies sporting high dividend yields. If a company has a long track record of raising dividends, this is a positive sign and shows that the business is resilient to economic cycles.
Other businesses may continue to maintain dividends even though profits may fluctuate along with the business cycle, and such businesses are also on my radar as management is willing and able to continue to pay out cash to investors.
Here are three solid dividend stocks in Hong Kong that investors can consider for their retirement portfolios.
1. Giordano International Limited
Giordano International Limited (SEHK: 709) is an international retailer of men’s, women’s and children’s apparel and accessories. The group employs over 8,000 staff and has over 2,400 stores operating in more than 30 countries and regions worldwide.
For H1 2019, Giordano’s business saw an 11.1% year-on-year decline in revenue, while earnings fell by a sharper 36.6% year-on-year to HK$161 million (US$20.6 million). An interim dividend of HK 10.2 cents was declared.
Together with last year’s final dividend of HK 16.5 cents the trailing 12-month dividend was HK 26.7 cents. This implies a trailing dividend yield of 11.4%. Investors should note that the final dividend may be further reduced due to lower earnings this year, but the dividend yield should still be above 5%.
2. CK Infrastructure Holdings Ltd
CK Infrastructure Holdings Ltd (SEHK: 1038), or CKI, is a conglomerate that owns and operates infrastructure assets in Hong Kong, China, Australia, New Zealand, Europe and North America. The group has diversified investments in energy infrastructure, transportation infrastructure (such as toll roads) and water treatment plants.
For FY 2018, CKI once again raised its total dividend per share to HK$2.43, a year-on-year increase of 2.1%. This is the group’s 22nd consecutive dividend increase and judging by the stability of its underlying portfolio of assets, I believe CKI can continue to maintain and increase dividends over time. The shares are trading at a trailing dividend yield of around 4.5%.
3. Vtech Holdings Ltd
Vtech Holdings Ltd (SEHK: 303) is a global leader in electronic learning products for infants and small children. The group is also the largest manufacturer of residential phones in the USA. Vtech has advanced manufacturing facilities in Malaysia and China and employs around 26,000 employees across 14 countries and regions.
Vtech recently reported its FY 2019 earnings (for the fiscal year ended 31 March 2019). Though revenue was up 1.5% year-on-year, net profit attributable to shareholders tumbled 17% year-on-year to US$171.3 million. The group declared a total annual dividend of US 67 cents (around HK$5.25) per share.
The shares have a trailing dividend yield of around 6.9%. Investors need to keep a watchful eye on the business to see if Vtech can report better numbers in its current fiscal year.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Royston Yang doesn’t own shares in any companies mentioned.