Flexium Interconnect (TWSE:6269) Has Announced A Dividend Of NT$5.00

Flexium Interconnect, Inc.'s (TWSE:6269) investors are due to receive a payment of NT$5.00 per share on 5th of July. This makes the dividend yield 5.1%, which will augment investor returns quite nicely.

View our latest analysis for Flexium Interconnect

Flexium Interconnect Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last payment made up 79% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

EPS is set to fall by 40.3% over the next 12 months. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 147%, which is definitely a bit high to be sustainable going forward.

Flexium Interconnect Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was NT$1.98 in 2014, and the most recent fiscal year payment was NT$5.00. This means that it has been growing its distributions at 9.7% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth Is Doubtful

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Over the past five years, it looks as though Flexium Interconnect's EPS has declined at around 5.3% a year. 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.

Our Thoughts On Flexium Interconnect's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think Flexium Interconnect 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. For example, we've picked out 1 warning sign for Flexium Interconnect that investors should know about before committing capital to this stock. Is Flexium Interconnect not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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