AHOKU Electronic's (TWSE:3002) Upcoming Dividend Will Be Larger Than Last Year's

AHOKU Electronic Company (TWSE:3002) will increase its dividend from last year's comparable payment on the 20th of September to NT$0.3195. Even though the dividend went up, the yield is still quite low at only 2.2%.

View our latest analysis for AHOKU Electronic

AHOKU Electronic Doesn't Earn Enough To Cover Its Payments

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before this announcement, AHOKU Electronic was paying out 148% of what it was earning, and not generating any free cash flows either. This high of a dividend payment could start to put pressure on the balance sheet in the future.

EPS is set to fall by 9.7% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 141%, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the annual payment back then was NT$1.00, compared to the most recent full-year payment of NT$0.32. Dividend payments have fallen sharply, down 68% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Is Doubtful

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. In the last five years, AHOKU Electronic's earnings per share has shrunk at approximately 9.7% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

We're Not Big Fans Of AHOKU Electronic's Dividend

In summary, investors will like to be receiving a higher dividend, but we have some questions about whether it can be sustained over the long term. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, this doesn't get us very excited from an income standpoint.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for AHOKU Electronic (of which 2 shouldn't be ignored!) you should know about. Is AHOKU Electronic 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.