Important news for shareholders and potential investors in Silicon Motion Technology Corporation (NASDAQ:SIMO): The dividend payment of $0.3 per share will be distributed into shareholder on 24 November 2017, and the stock will begin trading ex-dividend at an earlier date, 08 November 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine SIMO’s latest financial data to analyse its dividend characteristics. View our latest analysis for Silicon Motion Technology
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Silicon Motion Technology fare?
The current payout ratio for the stock is 31.17%, meaning the dividend is sufficiently covered by earnings. Looking forward, analysts expect SIMO to pay out 32.67% of its earnings leading to a dividend yield of 2.41%. In addition to this, EPS should increase to $2.74. This means the company should be able to continue to payout dividends. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Silicon Motion Technology as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Silicon Motion Technology produces a yield of 2.50%, which is high for semiconductors and semiconductor equipment stocks but still below the market’s top dividend payers.
What this means for you:
Are you a shareholder? If SIMO is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be valuable exploring other dividend stocks as alternatives to SIMO or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? If you are building an income portfolio, then Silicon Motion Technology is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, SIMO could still be an interesting investment opportunity. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Dig deeping in our latest free fundmental analysis to explore other aspects of SIMO.
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.