Ecoplastic (KOSDAQ:038110) Is Paying Out A Dividend Of ₩60.00

Ecoplastic Corporation (KOSDAQ:038110) will pay a dividend of ₩60.00 on the 27th of April. This payment means that the dividend yield will be 2.1%, which is around the industry average.

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Ecoplastic's Projections Indicate Future Payments May Be Unsustainable

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, the dividend made up 146% of earnings, and the company was generating negative free cash flows. This high of a dividend payment could start to put pressure on the balance sheet in the future.

Earnings per share could rise by 38.6% over the next year if things go the same way as they have for the last few years. If the dividend continues on its recent course, the payout ratio in 12 months could be 105%, which is a bit high and could start applying pressure to the balance sheet.

See our latest analysis for Ecoplastic

Ecoplastic Is Still Building Its Track Record

Ecoplastic's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of ₩30.00 in 2019 to the most recent total annual payment of ₩60.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Ecoplastic has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Dividend Growth Could Be Constrained

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Ecoplastic has been growing its earnings per share at 39% a year over the past five years. While EPS is growing rapidly, Ecoplastic paid out a very high 146% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.

Ecoplastic's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, Ecoplastic has 5 warning signs (and 3 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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