DingZing Advanced Materials' (TWSE:6585) Upcoming Dividend Will Be Larger Than Last Year's

DingZing Advanced Materials Inc.'s (TWSE:6585) periodic dividend will be increasing on the 11th of July to NT$4.00, with investors receiving 33% more than last year's NT$3.00. This takes the annual payment to 1.6% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for DingZing Advanced Materials

DingZing Advanced Materials' Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, DingZing Advanced Materials' dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 41.4% if recent trends continue. If the dividend continues on this path, the payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.

DingZing Advanced Materials Is Still Building Its Track Record

DingZing Advanced Materials' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of NT$1.50 in 2017 to the most recent total annual payment of NT$3.00. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. DingZing Advanced Materials has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that DingZing Advanced Materials has grown earnings per share at 41% per year over the past five years. DingZing Advanced Materials is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like DingZing Advanced Materials' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for DingZing Advanced Materials that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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