Siward Crystal Technology Co., Ltd. (TWSE:2484) will reduce its dividend to NT$1.50 on September 27th from the dividend paid in the same period last year. This means that the annual dividend is 5.2% of the current share price, above the industry average.
View our latest analysis for Siward Crystal Technology
Siward Crystal Technology doesn't make enough profit to cover its payments
While we like to see a strong dividend yield, this is pointless if the payout is not sustainable. Prior to this announcement, the company was paying out 130% of its earnings as dividends. This is hardly ideal and could put a significant strain on the balance sheet if it continues.
If recent trends continue, EPS is expected to decrease by 2.0% over the next 12 months. If dividends continue along recent trends, the trailing 12-month dividend payout ratio could be 141%, which is obviously a bit high to be sustainable going forward.
TWSE:2484 August 8, 2024 Historical Dividend
Dividend fluctuations
The company has a shaky dividend history, with at least one cut in the past decade. Since 2014, the most recent annual payment was NT$1.50, compared to NT$0.60 paid at the time. This means there has been a 9.6% annual dividend increase over this period. While the growth looks promising, there has been a history of dividend cuts, so one should be a bit cautious about the track record.
Siward Crystal Technology may struggle to increase its dividend
With a relatively unstable dividend, it's even more important to see if earnings per share are growing. Over the past five years, Siward Crystal Technology's earnings per share have fallen at around 2.0% per year. As profits fall, dividends will inevitably fall in line with falling profits.
We're not particularly keen on Siward Crystal Technology's dividend.
Overall, the dividend seems a bit too high, which is why it has been cut. The company doesn't make enough profits to justify paying out such a large amount, and the other factors aren't particularly encouraging. Overall, the dividend isn't reliable enough to make this a good income stock.
Companies with a stable dividend policy are more likely to attract investor interest than those that suffer from an inconsistent approach. Meanwhile, despite the importance of dividends, they aren't the only factor our readers should know when assessing a company. As an example, Siward Crystal Technology has 2 warning signs (1 of which is a bit unpleasant!) you should be aware of. Could Siward Crystal Technology be the investment opportunity you've been looking for? Why not check out our top dividend stocks selection?
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
