Deswell Industries (NASDAQ:DSWL) Will Pay A Dividend Of $0.10
Deswell Industries (NASDAQ:DSWL) announced a dividend of $0.10 per share, payable on December 23, with a yield of 5.8%. The company's earnings cover the dividend, suggesting sustainability. Despite past dividend cuts, earnings per share have grown 17% annually over five years, indicating potential for future dividend growth. The payout ratio could be 23% next year, showing room for increase. Investors should note the company's consistent dividend policy, though there are warning signs to consider before investing.
Deswell Industries, Inc. (NASDAQ:DSWL) has announced that it will pay a dividend of $0.10 per share on the 23rd of December. The dividend yield will be 5.8% based on this payment which is still above the industry average.
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Deswell Industries' Payment Could Potentially Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Deswell Industries' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share could rise by 16.9% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.
Check out our latest analysis for Deswell Industries
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. There hasn't been much of a change in the dividend over the last 10 years. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Deswell Industries has grown earnings per share at 17% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Deswell Industries' Dividend
Overall, we like to see the dividend staying consistent, and we think Deswell Industries might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for Deswell Industries that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
