FIT Holding Co., Ltd. (TWSE:3712) has announced a dividend payment of NT$2.00 on the 16th of August, with a dividend yield of 2.7%. Although this yield is lower compared to other companies in the industry, FIT Holding’s stock price has seen a 32% increase in the last 3 months, which is good news for shareholders.
It is important to consider not only the dividend yield but also any significant share price movements, as these can impact overall returns. Prior to this announcement, FIT Holding’s dividend accounted for 130% of earnings, with negative free cash flows. While the payout ratio could reach 95% in the future, given a 40.7% potential increase in EPS over the next year, it may be on the higher side but not necessarily unsustainable.
Despite a history of dividend cuts over the past 10 years, FIT Holding has shown a compound annual growth rate of approximately 4.1% in its dividend payments. However, with EPS growing at 41% per year over the past five years, the company may need to reconsider its dividend payout ratio of 130% of earnings.
In conclusion, while FIT Holding has the potential to be a good dividend stock in the future, investors should be cautious about relying solely on its dividend income. A stable dividend policy can attract greater investor interest, but other factors beyond dividends should also be considered when analyzing a company. FIT Holding may not be the ideal choice for dividend investors, but its strong earnings growth could offer potential in the future.