Yi Shin Textile Industrial's (TWSE:4440) Dividend Is Being Reduced To NT$1.00

Yi Shin Textile Industrial Co., Ltd. (TWSE:4440) has announced that on 5th of July, it will be paying a dividend ofNT$1.00, which a reduction from last year's comparable dividend. The dividend yield will be in the average range for the industry at 3.9%.

See our latest analysis for Yi Shin Textile Industrial

Yi Shin Textile Industrial Is Paying Out More Than It Is Earning

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before this announcement, Yi Shin Textile Industrial was paying out 149% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

EPS is set to fall by 16.5% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 133%, which could put the dividend under pressure if earnings don't start to improve.

Yi Shin Textile Industrial's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The dividend has gone from an annual total of NT$1.2 in 2020 to the most recent total annual payment of NT$1.00. The dividend has shrunk at around 4.4% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Yi Shin Textile Industrial's EPS has declined at around 16% a year. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

We're Not Big Fans Of Yi Shin Textile Industrial's Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. 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. We don't think that this is a great candidate to be an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 6 warning signs for Yi Shin Textile Industrial (of which 3 can't be ignored!) you should know about. Is Yi Shin Textile Industrial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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