Good Will Instrument (TWSE:2423) Has Announced That It Will Be Increasing Its Dividend To NT$2.20

Good Will Instrument Co., Ltd. (TWSE:2423) has announced that it will be increasing its periodic dividend on the 19th of July to NT$2.20, which will be 10% higher than last year's comparable payment amount of NT$2.00. Based on this payment, the dividend yield for the company will be 4.8%, which is fairly typical for the industry.

See our latest analysis for Good Will Instrument

Good Will Instrument's Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before this announcement, Good Will Instrument was paying out 75% of earnings, but a comparatively small 75% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS could expand by 5.4% if the company continues along the path it has been on recently. If recent patterns in the dividend continue, the payout ratio in 12 months could be 89% which is a bit high but can definitely be sustainable.

Good Will Instrument 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$0.211 total annually to NT$2.00. This means that it has been growing its distributions at 25% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Good Will Instrument's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Good Will Instrument has been growing its earnings per share at 5.4% a year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

We Really Like Good Will Instrument's Dividend

Overall, a dividend increase is always good, and we think that Good Will Instrument is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 Good Will Instrument that you should be aware of before investing. 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.