King Yuan Electronics (TWSE:2449) Will Pay A Smaller Dividend Than Last Year

King Yuan Electronics Co., Ltd. (TWSE:2449) has announced that on 14th of August, it will be paying a dividend ofNT$3.20, which a reduction from last year's comparable dividend. This means that the annual payment will be 2.6% of the current stock price, which is in line with the average for the industry.

View our latest analysis for King Yuan Electronics

King Yuan Electronics' Earnings Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, King Yuan Electronics' 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.

Looking forward, earnings per share is forecast to rise by 68.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

King Yuan Electronics Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from NT$1.10 total annually to NT$3.20. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. King Yuan Electronics has impressed us by growing EPS at 27% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that King Yuan Electronics could prove to be a strong dividend payer.

King Yuan Electronics Looks Like A Great Dividend Stock

In general, we don't like to see the dividend being cut, especially when the company has such high potential like King Yuan Electronics does. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 9 King Yuan Electronics analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is King Yuan Electronics 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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