For a while now, Nam Tai (NYSE:NTE) was a strange sort of tech company. Not only was it the rare electronics manufacturing business that was able to post real growth at a time when rivals like Solectron (NYSE:SLR) and Jabil (NYSE:JBL) had found growth challenging, but it paid a healthy dividend to boot. Seriously, how often do you find a 7% yield at a company that isn't either a royalty trust/partnership or in serious trouble?

Sadly, investors will soon be bidding adieu to a chunk of that nice payout. The company has decided that investing cash flow into capital expansion is a more prudent near-term idea, and so it's cutting the proposed payout for next year. Though the company had briefly used a formula that allowed anyone to project future dividends, these expansion plans have shelved that formula.

Where the company is currently paying out $0.38 a share each quarter, that will fall to $0.21 next year. And the actual dividend portion drops from $0.22 to $0.05, with the remainder being paid out from past accumulated non-operating income (such as gains on asset sales).

Speaking of those expansion plans, management apparently believes that they will spend upwards of $260 million over the next four years. Slated projects include pursuing more vertical integration for printed circuit board manufacturing, expanding factories in China, and possibly opening facilities in Eastern Europe.

While shareholders may be disappointed by these lower dividend payments, I believe this is a wise move. American companies (like, somewhat recently, General Motors (NYSE:GM)) too often hang on to dividend payments that are no longer reflective of the company's real earnings and/or capital needs. And though it can be painful to disappoint shareholders with a lower quarterly check, I'd argue it's even more painful to strain the business or take on excessive debt simply for the supposed virtues of maintaining a steady or ever-increasing payout.

All that said, I suppose I can be glad that management is confident enough in the business to add capacity and stingy enough with capital management to try to do so at the lowest cost possible. It might not be a popular decision, but it strikes me as the right one.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).