Don't Buy Woory Industrial Holdings Co.,Ltd. (KOSDAQ:072470) For Its Next Dividend Without Doing These Checks

Woory Industrial Holdings Co.,Ltd. (KOSDAQ:072470) stock is about to trade ex-dividend in three days. If you purchase the stock on or after the 29th of December, you won't be eligible to receive this dividend, when it is paid on the 22nd of April.

Woory Industrial HoldingsLtd's next dividend payment will be ₩25.00 per share. Last year, in total, the company distributed ₩25.00 to shareholders. Looking at the last 12 months of distributions, Woory Industrial HoldingsLtd has a trailing yield of approximately 0.5% on its current stock price of ₩5140. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Woory Industrial HoldingsLtd

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Woory Industrial HoldingsLtd's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Woory Industrial HoldingsLtd didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Over the last year it paid out 61% of its free cash flow as dividends, within the usual range for most companies.

Click here to see how much of its profit Woory Industrial HoldingsLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Woory Industrial HoldingsLtd was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Woory Industrial HoldingsLtd has seen its dividend decline 10% per annum on average over the past 10 years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

We update our analysis on Woory Industrial HoldingsLtd every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

Is Woory Industrial HoldingsLtd an attractive dividend stock, or better left on the shelf? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. Bottom line: Woory Industrial HoldingsLtd has some unfortunate characteristics that we think could lead to sub-optimal outcomes for dividend investors.

With that in mind though, if the poor dividend characteristics of Woory Industrial HoldingsLtd don't faze you, it's worth being mindful of the risks involved with this business. Our analysis shows 3 warning signs for Woory Industrial HoldingsLtd that we strongly recommend you have a look at before investing in the company.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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