HANMI Semiconductor (KRX:042700) Will Pay A Larger Dividend Than Last Year At ₩800.00
The board of HANMI Semiconductor Co., Ltd. (KRX:042700) has announced that it will be paying its dividend of ₩800.00 on the 1st of January, an increased payment from last year's comparable dividend. This takes the annual payment to 0.6% of the current stock price, which unfortunately is below what the industry is paying.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that HANMI Semiconductor's stock price has increased by 44% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
HANMI Semiconductor's Future Dividend Projections Appear Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, HANMI Semiconductor's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 195.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 11% by next year, which is in a pretty sustainable range.
Check out our latest analysis for HANMI Semiconductor
HANMI Semiconductor's Dividend Has Lacked Consistency
Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of ₩125.00 in 2020 to the most recent total annual payment of ₩800.00. This implies that the company grew its distributions at a yearly rate of about 36% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. HANMI Semiconductor has impressed us by growing EPS at 41% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
HANMI Semiconductor Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that HANMI Semiconductor is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for HANMI Semiconductor that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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