The board of The Great Taipei Gas Corporation (TWSE:9908) has announced that it will be paying its dividend of NT$1.20 on the 28th of August, an increased payment from last year's comparable dividend. This makes the dividend yield 3.7%, which is above the industry average.
See our latest analysis for Great Taipei Gas
Great Taipei Gas' Payment Has Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite comfortably covered by Great Taipei Gas' earnings, but it was a bit tighter on the cash flow front. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.
Looking forward, earnings per share could rise by 10.0% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 48% by next year, which we think can be pretty sustainable going forward.
Great Taipei Gas 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$1.00 total annually to NT$1.20. This works out to be a compound annual growth rate (CAGR) of approximately 1.8% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
We Could See Great Taipei Gas' Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. Great Taipei Gas has seen EPS rising for the last five years, at 10.0% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
In Summary
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. On the plus side, the dividend looks sustainable by most measures but it is let down by the lack of cash flows. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Great Taipei Gas that investors should know about before committing capital to this stock. 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.
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About TWSE:9908
Flawless balance sheet average dividend payer.
