SciVision Biotech's (TWSE:1786) Upcoming Dividend Will Be Larger Than Last Year's

SciVision Biotech Inc. (TWSE:1786) will increase its dividend from last year's comparable payment on the 16th of August to NT$2.41. This takes the annual payment to 2.2% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for SciVision Biotech

SciVision Biotech's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Before this announcement, SciVision Biotech was paying out 85% of earnings, but a comparatively small 59% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Earnings per share could rise by 16.7% over the next year if things go the same way as they have for the last few years. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 86%, which is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

SciVision Biotech's Dividend Has Lacked Consistency

SciVision Biotech has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. Since 2016, the dividend has gone from NT$0.439 total annually to NT$2.50. This implies that the company grew its distributions at a yearly rate of about 24% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

SciVision Biotech's Dividend Might Lack Growth

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. SciVision Biotech has seen EPS rising for the last five years, at 17% per annum. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

Our Thoughts On SciVision Biotech's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for SciVision Biotech 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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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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