World Known MFG (Cayman)'s (TWSE:4581) Upcoming Dividend Will Be Larger Than Last Year's

World Known MFG (Cayman) Limited (TWSE:4581) will increase its dividend from last year's comparable payment on the 28th of August to NT$3.60. This makes the dividend yield 5.7%, which is above the industry average.

Check out our latest analysis for World Known MFG (Cayman)

World Known MFG (Cayman)'s Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, World Known MFG (Cayman)'s dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share could rise by 5.4% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 64% by next year, which we think can be pretty sustainable going forward.

World Known MFG (Cayman)'s Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2020, the dividend has gone from NT$3.00 total annually to NT$3.60. This implies that the company grew its distributions at a yearly rate of about 4.7% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

We Could See World Known MFG (Cayman)'s Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. World Known MFG (Cayman) has impressed us by growing EPS at 5.4% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On World Known MFG (Cayman)'s Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for World Known MFG (Cayman) that investors need to be conscious of moving forward. Is World Known MFG (Cayman) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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