Oriental Union Chemical (TWSE:1710) Has Affirmed Its Dividend Of NT$0.20

The board of Oriental Union Chemical Corporation (TWSE:1710) has announced that it will pay a dividend on the 26th of July, with investors receiving NT$0.20 per share. This means the annual payment will be 1.2% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Oriental Union Chemical

Oriental Union Chemical's Distributions May Be Difficult To Sustain

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Even though Oriental Union Chemical is not generating a profit, it is still paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

Looking forward, earnings per share could rise by 6.8% over the next year if the trend from the last few years continues. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was NT$1.20 in 2014, and the most recent fiscal year payment was NT$0.20. Dividend payments have fallen sharply, down 83% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Oriental Union Chemical Could Grow Its Dividend

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Oriental Union Chemical has seen EPS rising for the last five years, at 6.8% per annum. It's not an ideal situation that the company isn't turning a profit but the growth recently is a positive sign. Assuming the company can post positive net income numbers soon, it could has the potential to be a decent dividend payer.

Oriental Union Chemical's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Oriental Union Chemical's payments, as there could be some issues with sustaining them into the future. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. As an example, we've identified 1 warning sign for Oriental Union Chemical that you should be aware of before investing. Is Oriental Union Chemical not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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