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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.
Valuation is complex, but we're here to simplify it.
Discover if World Known MFG (Cayman) might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.
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About TWSE:4581
World Known MFG (Cayman)
Manufactures and sells automobile and green energy parts in the United States and internationally.