Small capSouFun Holdings (
) is a growth stock with a big dividend yield -- 7.1%.
stock market today
, however, an outsized yield should prompt questions. SouFun only
began paying dividends in 2011 and the timing of the payouts is
The first payout was in August 2011 -- $1 per American
depositary receipt. In 2012, a $1-a-share dividend was paid in
January and September. No dividend has yet been declared for
The irregular timing may be off-putting to
seeking income. Yet
often focus on capital appreciation, taking what income is needed
out of stock profits.
SouFun is an Internet portal in China that provides real
estate listings, along with information on home furnishings and
home improvement. Most of the company's revenue is derived from
Although the stock is thinly traded (290,000 daily), the
Composite Rating is a best-possible 99. The Composite Rating
combines all five IBD ratings into a single number.
Earnings have been consistent. SouFun's three-year EPS
Stability Factor is 8 and the five-year number is 21. The scale
runs from 0 (calm) to 99 (erratic). Annual earnings growth has
been exceptional. In the past five years through 2012, earnings
grew 92%, 72%, 66%, 70% and 42%. The Street, though, expects only
10% growth this year.
The projected slowdown in earnings growth is a concern.
One ever-present risk is China's government officials and
their efforts to control the economy. For example, after China's
real estate boom in 2009-10, the government moved to stop the
sector from "overheating" with a series of rulings.
China policies designed to control banks can affect the ease
of obtaining loans to buy a house. That can depress advertising.
Granted, this isn't different than Western nations, but it's
still a risk.
SouFun's stock cleared a buy point at 19 from a first-stage
pattern in early October. The breakout failed, triggering the 8%
sell rule on Oct. 18. The stock found support at the 50-day line
and bounced off it in November. A second trip and bounce off the
50-day line in late January set a new buy zone.