Three Days Left To Buy SJM Holdings Co.,Ltd. (KRX:025530) Before The Ex-Dividend Date

It looks like SJM Holdings Co.,Ltd. (KRX:025530) is about to go ex-dividend in the next 3 days. Investors can purchase shares before the 29th of December in order to be eligible for this dividend, which will be paid on the 24th of April.

SJM HoldingsLtd's next dividend payment will be ₩175 per share, and in the last 12 months, the company paid a total of ₩175 per share. Last year's total dividend payments show that SJM HoldingsLtd has a trailing yield of 5.8% on the current share price of ₩3010. If you buy this business for its dividend, you should have an idea of whether SJM HoldingsLtd's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for SJM HoldingsLtd

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. It paid out 78% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings. A useful secondary check can be to evaluate whether SJM HoldingsLtd generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 25% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that SJM HoldingsLtd'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 SJM HoldingsLtd 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 SJM HoldingsLtd's 17% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, SJM HoldingsLtd has lifted its dividend by approximately 1.6% a year on average.

To Sum It Up

Is SJM HoldingsLtd worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. In summary, it's hard to get excited about SJM HoldingsLtd from a dividend perspective.

If you want to look further into SJM HoldingsLtd, it's worth knowing the risks this business faces. We've identified 2 warning signs with SJM HoldingsLtd (at least 1 which shouldn'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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