Yi Jinn Industrial (TWSE:1457) Is Paying Out A Dividend Of NT$1.00

Yi Jinn Industrial Co., Ltd.'s (TWSE:1457) investors are due to receive a payment of NT$1.00 per share on 6th of May. Based on this payment, the dividend yield will be 4.7%, which is fairly typical for the industry.

Check out our latest analysis for Yi Jinn Industrial

Yi Jinn Industrial's Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Yi Jinn Industrial was paying a whopping 110% as a dividend, but this only made up 30% of its overall earnings. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

Looking forward, earnings per share could rise by 15.2% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was NT$0.102 in 2015, and the most recent fiscal year payment was NT$0.952. This means that it has been growing its distributions at 25% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Yi Jinn Industrial has grown earnings per share at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Yi Jinn Industrial's prospects of growing its dividend payments in the future.

Our Thoughts On Yi Jinn Industrial's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Yi Jinn Industrial is earning enough to cover the payments, the cash flows are lacking. 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 example, we've identified 3 warning signs for Yi Jinn Industrial (1 shouldn't be ignored!) that you should be aware of before investing. Is Yi Jinn Industrial 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.