YungShin Global Holding's (TWSE:3705) Upcoming Dividend Will Be Larger Than Last Year's

The board of YungShin Global Holding Corporation (TWSE:3705) has announced that it will be increasing its dividend by 30% on the 16th of July to NT$3.00, up from last year's comparable payment of NT$2.30. This will take the annual payment to 4.1% of the stock price, which is above what most companies in the industry pay.

YungShin Global Holding's Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by YungShin Global Holding's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share could rise by 8.7% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 72% by next year, which is in a pretty sustainable range.

Check out our latest analysis for YungShin Global Holding

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was NT$1.9 in 2015, and the most recent fiscal year payment was NT$2.30. This implies that the company grew its distributions at a yearly rate of about 1.9% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. YungShin Global Holding has impressed us by growing EPS at 8.7% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

YungShin Global Holding Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that YungShin Global Holding is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for YungShin Global Holding that investors should take into consideration. Is YungShin Global Holding 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.