Voltronic Power Technology's (TWSE:6409) Shareholders Will Receive A Smaller Dividend Than Last Year

Voltronic Power Technology Corp.'s (TWSE:6409) dividend is being reduced by 14% to NT$37.5 per share on 22nd of August, in comparison to last year's comparable payment of NT$43.51. This means that the dividend yield is 2.2%, which is a bit low when comparing to other companies in the industry.

See our latest analysis for Voltronic Power Technology

Voltronic Power Technology's Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, the company was paying out 99% of what it was earning and 88% of cash flows. The company could be more focused on returning cash to shareholders, but this could indicate that growth opportunities are few and far between.

Earnings per share is forecast to rise by 31.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 81%, which is on the higher side, but certainly still feasible.

Voltronic Power Technology Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was NT$5.72, compared to the most recent full-year payment of NT$43.51. This means that it has been growing its distributions at 22% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Voltronic Power Technology Might Find It Hard To Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Voltronic Power Technology has been growing its earnings per share at 13% a year over the past five years. Although per-share earnings are growing at a credible rate, the massive payout ratio may limit growth in the company's future dividend payments.

Our Thoughts On Voltronic Power Technology's Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The payout levels might be a bit high for our liking, but we can't deny that until now, the payments have been pretty consistent. We would probably look elsewhere for an income investment.

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 1 warning sign for Voltronic Power Technology that investors need to be conscious of moving forward. Is Voltronic Power Technology 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.

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