Yahoo Finance Should You Buy Avi-Tech Electronics Limited (SGX:BKY) For Its Dividend?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 10 years, Avi-Tech Electronics Limited (SGX:BKY) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Avi-Tech Electronics should have a place in your portfolio. See our latest analysis for Avi-Tech Electronics
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Avi-Tech Electronics fare?
The current trailing twelve-month payout ratio for the stock is 63.01%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 93.73%, leading to a dividend yield of 7.60%. In addition to this, EPS should increase to SGD0.038. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Not only have dividend payouts from Avi-Tech Electronics fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
In terms of its peers, Avi-Tech Electronics produces a yield of 6.58%, which is on the low-side for Semiconductor stocks.
Next Steps:
Whilst there are few things you may like about Avi-Tech Electronics from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three key factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for BKY’s future growth? Take a look at our free research report of analyst consensus for BKY’s outlook.
Valuation: What is BKY worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BKY is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
