Vishay Intertechnology (NYSE:VSH) Has Affirmed Its Dividend Of $0.10

The board of Vishay Intertechnology, Inc. (NYSE:VSH) has announced that it will pay a dividend on the 26th of March, with investors receiving $0.10 per share. The dividend yield will be 1.8% based on this payment which is still above the industry average.

See our latest analysis for Vishay Intertechnology

Vishay Intertechnology's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Vishay Intertechnology was paying a whopping 152% as a dividend, but this only made up 17% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS is forecast to fall by 45.2%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 34%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Vishay Intertechnology 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. Since 2014, the dividend has gone from $0.24 total annually to $0.40. This implies that the company grew its distributions at a yearly rate of about 5.2% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Vishay Intertechnology hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

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 identified 3 warning signs for Vishay Intertechnology (1 is a bit unpleasant!) that you should be aware of before investing. Is Vishay Intertechnology not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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