Just Four Days Till Hankook Technology Group Co., Ltd. (KRX:000240) Will Be Trading Ex-Dividend

Hankook Technology Group Co., Ltd. (KRX:000240) stock is about to trade ex-dividend in four days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 22nd of April.

Hankook Technology Group's upcoming dividend is ₩350 a share, following on from the last 12 months, when the company distributed a total of ₩350 per share to shareholders. Last year's total dividend payments show that Hankook Technology Group has a trailing yield of 2.4% on the current share price of ₩14350. If you buy this business for its dividend, you should have an idea of whether Hankook Technology Group's dividend is reliable and sustainable. So we need to investigate whether Hankook Technology Group can afford its dividend, and if the dividend could grow.

See our latest analysis for Hankook Technology Group

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Hankook Technology Group paid out a comfortable 29% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 56% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Hankook Technology Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Hankook Technology Group's earnings per share have fallen at approximately 8.4% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Hankook Technology Group dividends are largely the same as they were 10 years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.

Final Takeaway

Is Hankook Technology Group worth buying for its dividend? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. In summary, while it has some positive characteristics, we're not inclined to race out and buy Hankook Technology Group today.

If you want to look further into Hankook Technology Group, it's worth knowing the risks this business faces. For example - Hankook Technology Group has 2 warning signs we think you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top 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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