Samsung Climate Control Co., Ltd. (KRX:006660) Stock Goes Ex-Dividend In Just Four Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Samsung Climate Control Co., Ltd. (KRX:006660) is about to trade ex-dividend in the next four days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 24th of April.

Samsung Climate Control's next dividend payment will be ₩60.00 per share. Last year, in total, the company distributed ₩60.00 to shareholders. Based on the last year's worth of payments, Samsung Climate Control stock has a trailing yield of around 0.8% on the current share price of ₩7100. 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.

See our latest analysis for Samsung Climate Control

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Samsung Climate Control paid out a comfortable 25% of its profit last year. A useful secondary check can be to evaluate whether Samsung Climate Control generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 8.2% of its cash flow last year.

It's positive to see that Samsung Climate Control'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 how much of its profit Samsung Climate Control paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Samsung Climate Control's 28% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Samsung Climate Control has delivered an average of 7.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

From a dividend perspective, should investors buy or avoid Samsung Climate Control? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. All things considered, we are not particularly enthused about Samsung Climate Control from a dividend perspective.

So while Samsung Climate Control looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. We've identified 4 warning signs with Samsung Climate Control (at least 1 which can't be ignored), and understanding these should be part of your investment process.

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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