BIT Computer's (KOSDAQ:032850) Upcoming Dividend Will Be Larger Than Last Year's

The board of BIT Computer Co., Ltd (KOSDAQ:032850) has announced that it will be paying its dividend of ₩66.00 on the 17th of April, an increased payment from last year's comparable dividend. This takes the dividend yield to 1.4%, which shareholders will be pleased with.

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BIT Computer's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, BIT Computer's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 5.0% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for BIT Computer

BIT Computer Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was ₩61.00 in 2019, and the most recent fiscal year payment was ₩66.00. This works out to be a compound annual growth rate (CAGR) of approximately 1.3% a year over that time. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

We Could See BIT Computer's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. BIT Computer has impressed us by growing EPS at 5.0% per year over the past five years. BIT Computer definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for BIT Computer that investors need to be conscious of moving forward. Is BIT Computer not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.