Skyworks Solutions (NASDAQ:SWKS) Is Increasing Its Dividend To $0.71

Skyworks Solutions, Inc. (NASDAQ:SWKS) has announced that it will be increasing its periodic dividend on the 16th of September to $0.71, which will be 1.4% higher than last year's comparable payment amount of $0.70. This takes the dividend yield to 3.7%, which shareholders will be pleased with.

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Skyworks Solutions' Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 111% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 31%. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

EPS is set to grow by 41.3% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 85% which is a bit high but can definitely be sustainable.

See our latest analysis for Skyworks Solutions

Skyworks Solutions Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.52, compared to the most recent full-year payment of $2.80. This means that it has been growing its distributions at 18% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Earnings per share has been sinking by 10% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On Skyworks Solutions' Dividend

In summary, while it's always good to see the dividend being raised, we don't think Skyworks Solutions' payments are rock solid. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for Skyworks Solutions that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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