Fulgent Sun International (Holding)'s (TWSE:9802) Dividend Will Be NT$2.00

The board of Fulgent Sun International (Holding) Co., Ltd. (TWSE:9802) has announced that it will pay a dividend of NT$2.00 per share on the 18th of April. This takes the annual payment to 4.0% of the current stock price, which is about average for the industry.

See our latest analysis for Fulgent Sun International (Holding)

Fulgent Sun International (Holding) Doesn't Earn Enough To Cover Its Payments

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last dividend was quite easily covered by Fulgent Sun International (Holding)'s earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Earnings per share could rise by 9.1% over the next year if things go the same way as they have for the last few years. If the dividend continues on its recent course, the payout ratio in 12 months could be 104%, which is a bit high and could start applying pressure to the balance sheet.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from NT$2.00 total annually to NT$5.00. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Fulgent Sun International (Holding) might have put its house in order since then, but we remain cautious.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Fulgent Sun International (Holding) has been growing its earnings per share at 9.1% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Fulgent Sun International (Holding)'s Dividend

Overall, a dividend increase is always good, and we think that Fulgent Sun International (Holding) is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Fulgent Sun International (Holding) that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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