Yahoo Finance Taitron Components (NASDAQ:TAIT) Is Paying Out A Dividend Of $0.05
Taitron Components Incorporated (NASDAQ:TAIT) will pay a dividend of $0.05 on the 31st of May. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.
See our latest analysis for Taitron Components
Taitron Components' Dividend Is Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Taitron Components' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share could rise by 4.5% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 71% by next year, which we think can be pretty sustainable going forward.
Taitron Components Doesn't Have A Long Payment History
It is great to see that Taitron Components 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 dividend has gone from an annual total of $0.10 in 2016 to the most recent total annual payment of $0.20. This means that it has been growing its distributions at 9.1% per annum over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 4.5% a year for the past five years, which isn't massive but still better than seeing them shrink. Taitron Components is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.
Our Thoughts On Taitron Components' Dividend
Overall, a consistent dividend is a good thing, and we think that Taitron Components has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 3 warning signs for Taitron Components that investors need to be conscious of moving forward. Is Taitron Components not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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