Powertech Technology (TWSE:6239) to Pay NT$7.00 Dividend

Powertech Technology Inc. (TWSE:6239) investors are set to receive a payment of NT$7.00 per share on September 5. The dividend yield will be 3.7% based on this payment, which is still above the industry average.

See our latest review for Powertech Technology

Powertech Technology’s dividend is well covered by earnings

Impressive dividend yields are nice, but that doesn’t matter much if the payments can’t be sustained. Powertech Technology’s latest dividend was easily covered by its profits. This means that a large portion of its profits are being retained to grow the business.

Next year, EPS is forecast to expand by 54.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

Powertech Technology has a solid track record

Even over a long history of dividend payments, the company’s distributions have been remarkably stable. Since 2014, the annual payout at that time was NT$2.00, compared to the most recent annual payout of NT$7.00. This means that it has increased its distributions by 13% per year during that time. Rapid dividend growth over a long period of time is a very valuable trait for an income stock.

We could see Powertech Technology’s dividend growing

Investors in the company will be pleased to have received dividend income for some time. We are encouraged to see that Powertech Technology has grown earnings per share by 8.4% per year over the past five years. Given that earnings per share are growing at an acceptable rate and the payout policy is balanced, we believe the company is well positioned to grow earnings and dividends in the future.

Powertech Technology looks like a great dividend stock

Overall, we think this is a great income investment, and we think maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments, and it’s great to see those earnings being translated into cash flow. Taking all of this into consideration, it looks like it could be a good dividend opportunity.

Investors generally tend to favor companies with a consistent and stable dividend policy as opposed to those that operate an irregular one. At the same time, there are other factors that our readers should be aware of before investing capital in a stock. As an example, we have identified 1 warning sign for Powertech Technology that you should be aware of before investing. Looking for more high-yield dividend ideas? Try our collection of strong dividend payers.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our aim is to bring you long-term focused 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 stocks mentioned.

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