Kulicke and Soffa Industries (NASDAQ:KLIC) Is Increasing Its Dividend To $0.19

The board of Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) has announced that it will be paying its dividend of $0.19 on the 10th of April, an increased payment from last year's comparable dividend. This takes the annual payment to 1.4% of the current stock price, which is about average for the industry.

View our latest analysis for Kulicke and Soffa Industries

Kulicke and Soffa Industries' Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Kulicke and Soffa Industries' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to fall by 43.1%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 27%, which is comfortable for the company to continue in the future.

Kulicke and Soffa Industries Doesn't Have A Long Payment History

Kulicke and Soffa Industries' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2018, the annual payment back then was $0.48, compared to the most recent full-year payment of $0.76. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. Kulicke and Soffa Industries has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Kulicke and Soffa Industries has been growing its earnings per share at 59% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Kulicke and Soffa Industries Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Kulicke and Soffa Industries that you should be aware of before investing. Is Kulicke and Soffa Industries not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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