A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, Himax Technologies Inc (NASDAQ:HIMX) has returned an average of 8.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Himax Technologies should have a place in your portfolio. See our latest analysis for Himax Technologies
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How well does Himax Technologies fit our criteria?
The current trailing twelve-month payout ratio for HIMX is 147.97%, which means that the dividend is not well-covered by its earnings. Furthermore, analysts are forecasting the payout ratio to exceed earnings going forward, leading to a future of uncertainty around the stability of HIMX’s dividend income. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although HIMX’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Himax Technologies has a yield of 3.42%, which is high for Semiconductor stocks but still below the market’s top dividend payers.
After digging a little deeper into Himax Technologies’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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. Below, I’ve compiled three important aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for HIMX’s future growth? Take a look at our free research report of analyst consensus for HIMX’s outlook.
- Historical Performance: What has HIMX’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.