Luxe Green Energy Technology's (TWSE:1529) Dividend Will Be Increased To NT$0.30

Luxe Green Energy Technology Co., Ltd. (TWSE:1529) has announced that it will be increasing its dividend from last year's comparable payment on the 11th of September to NT$0.30. Although the dividend is now higher, the yield is only 0.9%, which is below the industry average.

Check out our latest analysis for Luxe Green Energy Technology

Luxe Green Energy Technology's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Prior to this announcement, Luxe Green Energy Technology's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, EPS could fall by 2.7% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 60%, which is definitely feasible to continue.

Luxe Green Energy Technology's Dividend Has Lacked Consistency

It's comforting to see that Luxe Green Energy Technology has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 5 years was NT$0.181 in 2019, and the most recent fiscal year payment was NT$0.30. This means that it has been growing its distributions at 11% per annum over that time. Luxe Green Energy Technology has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Luxe Green Energy Technology May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's not great to see that Luxe Green Energy Technology's earnings per share has fallen at approximately 2.7% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Luxe Green Energy Technology's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Luxe Green Energy Technology's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Luxe Green Energy Technology that investors should take into consideration. Is Luxe Green Energy Technology not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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