Why You Might Be Interested In Taiwan Fire & Marine Insurance Co., Ltd. (TWSE:2832) For Its Upcoming Dividend

Taiwan Fire & Marine Insurance Co., Ltd. (TWSE:2832) stock is about to trade ex-dividend in 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Taiwan Fire & Marine Insurance investors that purchase the stock on or after the 18th of June will not receive the dividend, which will be paid on the 12th of July.

The company's next dividend payment will be NT$1.30 per share, on the back of last year when the company paid a total of NT$1.30 to shareholders. Last year's total dividend payments show that Taiwan Fire & Marine Insurance has a trailing yield of 4.6% on the current share price of NT$28.30. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Taiwan Fire & Marine Insurance can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Taiwan Fire & Marine Insurance

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Taiwan Fire & Marine Insurance's payout ratio is modest, at just 41% of profit.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Taiwan Fire & Marine Insurance paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Taiwan Fire & Marine Insurance's earnings per share have been growing at 15% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Taiwan Fire & Marine Insurance has lifted its dividend by approximately 1.7% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Is Taiwan Fire & Marine Insurance an attractive dividend stock, or better left on the shelf? Companies like Taiwan Fire & Marine Insurance that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Taiwan Fire & Marine Insurance appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while Taiwan Fire & Marine Insurance looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 1 warning sign for Taiwan Fire & Marine Insurance you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.