ScinoPharm Taiwan's (TWSE:1789) Shareholders Will Receive A Smaller Dividend Than Last Year

ScinoPharm Taiwan, Ltd. (TWSE:1789) has announced that on 25th of July, it will be paying a dividend ofNT$0.30, which a reduction from last year's comparable dividend. This payment takes the dividend yield to 1.0%, which only provides a modest boost to overall returns.

See our latest analysis for ScinoPharm Taiwan

ScinoPharm Taiwan's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last dividend, ScinoPharm Taiwan is earning enough to cover the payment, but then it makes up 218% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, EPS could fall by 0.04% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 58%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was NT$1.03, compared to the most recent full-year payment of NT$0.30. The dividend has fallen 71% over that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

ScinoPharm Taiwan May Find It Hard To Grow The Dividend

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. ScinoPharm Taiwan hasn't seen much change in its earnings per share over the last five years.

ScinoPharm Taiwan's Dividend Doesn't Look Sustainable

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on ScinoPharm Taiwan management tenure, salary, and performance. Is ScinoPharm Taiwan not quite the opportunity you were looking for? Why not check out our selection of top 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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