Hitron Technologies (TWSE:2419) Is Paying Out Less In Dividends Than Last Year

Hitron Technologies Inc.'s (TWSE:2419) dividend is being reduced from last year's payment covering the same period to NT$0.30 on the 8th of August. This means that the dividend yield is 1.0%, which is a bit low when comparing to other companies in the industry.

View our latest analysis for Hitron Technologies

Hitron Technologies' Distributions May Be Difficult To Sustain

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. While Hitron Technologies is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Looking forward, earnings per share could fall by 9.5% over the next year if the trend of the last few years can't be broken. While this means that the company will be unprofitable, we generally believe cash flows are more important, and the current cash payout ratio is quite healthy, which gives us comfort.

Hitron Technologies' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 3 years was NT$1.00 in 2021, and the most recent fiscal year payment was NT$0.30. The dividend has fallen 70% over that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Come By

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. In the last five years, Hitron Technologies' earnings per share has shrunk at approximately 9.5% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Hitron Technologies' Dividend Doesn't Look Sustainable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. 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. We don't think Hitron Technologies is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Hitron Technologies that you should be aware of before investing. Is Hitron Technologies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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