Vishay Intertechnology, Inc. (NYSE:VSH) Passed Our Checks, And It's About To Pay A 0.6% Dividend
Readers hoping to buy Vishay Intertechnology, Inc. (NYSE:VSH) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 11th of September to receive the dividend, which will be paid on the 26th of September.
Vishay Intertechnology's next dividend payment will be US$0.095 per share, and in the last 12 months, the company paid a total of US$0.38 per share. Based on the last year's worth of payments, Vishay Intertechnology has a trailing yield of 2.3% on the current stock price of $16.71. 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! So we need to investigate whether Vishay Intertechnology can afford its dividend, and if the dividend could grow.
View our latest analysis for Vishay Intertechnology
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Vishay Intertechnology paid out just 17% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Vishay Intertechnology's earnings per share have risen 20% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Vishay Intertechnology has delivered an average of 8.0% per year annual increase in its dividend, based on the past 6 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
From a dividend perspective, should investors buy or avoid Vishay Intertechnology? Vishay Intertechnology has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. There's a lot to like about Vishay Intertechnology, and we would prioritise taking a closer look at it.
Curious what other investors think of Vishay Intertechnology? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
