Skyworks Solutions (NASDAQ:SWKS) Is Paying Out A Larger Dividend Than Last Year

Skyworks Solutions, Inc. (NASDAQ:SWKS) has announced that it will be increasing its dividend from last year's comparable payment on the 19th of September to $0.68. This takes the dividend yield to 2.5%, which shareholders will be pleased with.

View our latest analysis for Skyworks Solutions

Skyworks Solutions' Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Skyworks Solutions' 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.

The next year is set to see EPS grow by 51.1%. If the dividend continues on this path, the payout ratio could be 30% by next year, which we think can be pretty sustainable going forward.

Skyworks Solutions Is Still Building Its Track Record

It is great to see that Skyworks Solutions has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 9 years was $0.44 in 2014, and the most recent fiscal year payment was $2.72. This means that it has been growing its distributions at 22% per annum over that time. Skyworks Solutions has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

We Could See Skyworks Solutions' 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 Skyworks Solutions has been growing its earnings per share at 5.4% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Skyworks Solutions' Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Skyworks Solutions 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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