Taitron Components Incorporated (NASDAQ:TAIT) Stock Goes Ex-Dividend In Just Two Days
Taitron Components Incorporated (NASDAQ:TAIT) is about to trade ex-dividend in the next 2 days. This means that investors who purchase shares on or after the 12th of November will not receive the dividend, which will be paid on the 30th of November.
Taitron Components's next dividend payment will be US$0.04 per share, on the back of last year when the company paid a total of US$0.14 to shareholders. Looking at the last 12 months of distributions, Taitron Components has a trailing yield of approximately 6.3% on its current stock price of $2.54. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Taitron Components has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Taitron Components
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Taitron Components distributed an unsustainably high 145% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 36% of the free cash flow it generated, which is a comfortable payout ratio.
It's good to see that while Taitron Components's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.
Click here to see how much of its profit Taitron Components paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Taitron Components's earnings have been skyrocketing, up 49% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past four years, Taitron Components has increased its dividend at approximately 12% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Has Taitron Components got what it takes to maintain its dividend payments? It's good to see earnings per share growing and low cashflow payout ratio, although we're uncomfortable with Taitron Components's paying out such a high percentage of its profit. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.
In light of that, while Taitron Components has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 4 warning signs with Taitron Components and understanding them should be part of your investment process.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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