ShunSin Technology Holdings (TWSE:6451) Is 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. Although the dividend is now higher, the yield is only 1.4%, which is below the industry average.

View our latest analysis for ShunSin Technology Holdings

ShunSin Technology Holdings' Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, ShunSin Technology Holdings was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

If the company can't turn things around, EPS could fall by 7.1% over the next year. 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

It's comforting to see that ShunSin Technology Holdings has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2015, the dividend has gone from NT$7.50 total annually to 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 Is Doubtful

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's not great to see that ShunSin Technology Holdings' earnings per share has fallen at approximately 7.1% per year over the past 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

In summary, while it's always good to see the dividend being raised, we don't think ShunSin Technology Holdings' payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for ShunSin Technology Holdings (2 make us uncomfortable!) that you should be aware of before investing. Is ShunSin Technology Holdings 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.