Bizlink Holding's (TWSE:3665) Shareholders Will Receive A Smaller Dividend Than Last Year

Bizlink Holding Inc. (TWSE:3665) has announced that on 16th of August, it will be paying a dividend ofNT$9.00, which a reduction from last year's comparable dividend. Despite the cut, the dividend yield of 3.2% will still be comparable to other companies in the industry.

See our latest analysis for Bizlink Holding

Bizlink Holding's Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Bizlink Holding'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.

The next year is set to see EPS grow by 73.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 41% by next year, which is in a pretty sustainable range.

Bizlink Holding Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was NT$4.28 in 2014, and the most recent fiscal year payment was NT$9.29. This works out to be a compound annual growth rate (CAGR) of approximately 8.1% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Bizlink Holding hasn't seen much change in its earnings per share over the last five years. Growth of 2.0% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

We Really Like Bizlink Holding's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Bizlink Holding has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 1 warning sign for Bizlink Holding that you should be aware of before investing. Is Bizlink Holding 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.