Unearthing the Perfect Blend of Dividends, Valuation, and Share Buybacks
HongKong Land Holdings, a leading property investor with prime commercial assets in Hong Kong and Singapore.
Established in 1889, the company is the second-largest office landlord in Hong Kong, boasting 4.1 million square feet of office space and 0.6 million square feet of retail space in central locations. Additionally, it holds 1.6 million square feet of premium office space in Singapore. HongKong Land derives about 75% of its operating profit from rental income, primarily from its Hong Kong properties, while property development projects in Singapore, Southeast Asia, and China contribute the remaining portion. The company is dual-listed on the London Stock Exchange and the Singapore Exchange, with a 50% ownership by Jardine Matheson Holdings.
Here are 4 key reasons why you should consider adding HongKong Land Holdings to your investment portfolio:
Attractive Dividend Yield:
HongKong Land's forward dividend yield is at 5%. This is an appealing return, especially for income-focused investors. Over the past 20 years, a dividend yield of 5% or higher has proven to be a good level to accumulate HongKong Land shares, as it has consistently served as a strong support level for the share price to appreciate higher.
Dividend Sustainability:
The company's dividend payout is likely to continue, as evidenced by its consistent yearly operating cash flow. HongKong Land's solid cash flow generation, coupled with its prudent capital management, ensures that investors can rely on the company's ability to maintain its dividend distributions in the future.
Compelling Valuation:
HongKong Land is currently trading below 0.3x PB, which suggests that investors are not overpaying for the stock. This PB level has historically shown to be a good support level for its share price, making it an opportune time to invest in the company. The attractive valuation is further supported by the company's strong balance sheet and proven track record of performance.
Share Buyback Program:
HongKong Land Holdings has announced its intention to invest up to an additional US$500 million in a share buyback program, valid until 31st December 2023. The program allows management to add value to shareholders by reducing the number of shares outstanding.
In conclusion, HongKong Land Holdings presents a compelling investment opportunity, offering an attractive dividend yield, sustainable payouts, a favorable valuation, and an ongoing share buyback program. The company's strong fundamentals and proven track record make it a worthy addition to any well-diversified investment portfolio.
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This is an opinion piece. Please always do your own due diligence on the company's fundamentals & assess if the Fundamental / Technical analysis opinions are applicable to your trading/investing needs.
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Chart source: tradingview.com
Image source: https://www.ourhkfoundation.org.hk/en/report/18/land/why-hong-kong%E2%80%99s-land-crisis-cannot-be-fixed-quickly-focusing-brownfield-sites