ShunSin Technology Holdings (TWSE:6451) Has Announced That It Will Be Increasing Its Dividend To NT$2.46

ShunSin Technology Holdings Limited (TWSE:6451) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of August to NT$2.46. This takes the annual payment to 0.9% of the current stock price, which unfortunately is below what the industry is paying.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that ShunSin Technology Holdings' stock price has increased by 58% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Check out our latest analysis for ShunSin Technology Holdings

ShunSin Technology Holdings' Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before this announcement, ShunSin Technology Holdings was paying out 89% of earnings, but a comparatively small 41% of free cash flows. This leaves plenty of cash for reinvestment into the business.

EPS is set to fall by 7.1% over the next 12 months if recent trends continue. However, if the dividend continues along recent trends, we estimate the payout ratio could reach 86%, meaning that most of the company's earnings is being paid out to shareholders.

ShunSin Technology Holdings' Dividend Has Lacked Consistency

Looking back, ShunSin Technology Holdings' dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2015, the annual payment back then was NT$7.50, compared to the most recent full-year payment of NT$2.46. Dividend payments have fallen sharply, down 67% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Come By

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. ShunSin Technology Holdings has seen earnings per share falling at 7.1% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On ShunSin Technology Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think ShunSin Technology Holdings will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think ShunSin Technology Holdings is a great stock to add to your portfolio if income is your focus.

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. Just as an example, we've come across 3 warning signs for ShunSin Technology Holdings you should be aware of, and 2 of them shouldn't be ignored. If you are a dividend investor, you might also want to look at our curated list of high yield 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com