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In times of crisis, like Covid-19, as investors we should appreciate the dependency of cash flow. In that sense, dividend stocks are important as they pay us out of company profits.
However, in Hong Kong, unlike the US, many stocks unfortunately only pay out their dividend twice a year. Yet there are some exceptions – these companies pay out every quarter.
That means a more regular cash flow for you, in that you receive dividend payments every three months. Large bank HSBC Holdings plc (SEHK: 5) used to be one of these before it cancelled its dividend.
As long-term income investors, though, we want reliable dividend payers. With that, here are two Hong Kong dividend stocks that pay shareholders a dividend every quarter.
1. CLP Holdings
First off, there’s the local electricity generation and transmission firm CLP Holdings Ltd (SEHK: 2). It has been a reliable payer of dividends over the years.
Over the years, CLP has grown its dividend at a respectable rate. Back in 2014, its dividend per share (DPS) was HK$2.62.
In 2019, it announced a DPS of HK$3.08. This meant its dividend expanded at a compound annual growth rate (CAGR) over the past five years of 3.3%.
It has also maintained a responsible capital position and only pays out what it can afford. In 2019, that meant a dividend payout ratio of 70%.
One other thing I like about CLP is its focus on non-fossil fuel generation. For example, in mainland China it generates the majority of its operating earnings from nuclear, solar and wind power.
Finally, for income investors, it pays out a dividend four times per year. Shareholders typically receive the dividends in their bank accounts in March, June, September, and December.
2. Hang Seng Bank
The second stock that pays out dividends every quarter to shareholders is Hang Seng Bank Ltd (SEHK: 11). Known locally as a reliable majority-owned subsidiary of HSBC, it has managed to grow its dividend sustainably.
For the five year period from 2014-2019, Hang Seng Bank grew its annual dividend per share (DPS) from HK$5.60 to HK$8.20. That means its dividend expanded at a CAGR of 7.9% over the past five years.
However, investors should note that Hang Seng Bank cut its first-quarter 2020 DPS by 21% to HK$1.10. If we extrapolate out that dividend reduction, then Hang Seng Bank’s DPS for 2020 will be around HK$6.50.
The bank said in its first-quarter announcement of the dividend that “the bank’s financial position remains resilient and it maintains a strong capital base”.
Even with the reduction in the dividend, Hang Seng shares are yielding 4.8% on a forward 12-month basis (at the time of writing).
For income investors, the bank normally pays out its dividend four times per year; in March, June, September, and November.
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 Tim Phillips doesn’t own shares in any companies mentioned.