There's A Lot To Like About Sangsangin's (KOSDAQ:038540) Upcoming ₩200 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Sangsangin Co., Ltd. (KOSDAQ:038540) is about to trade ex-dividend in the next three days. Ex-dividend means that investors that purchase the stock on or after the 29th of December will not receive this dividend, which will be paid on the 31st of March.

Sangsangin's next dividend payment will be ₩200 per share, on the back of last year when the company paid a total of ₩200 to shareholders. Looking at the last 12 months of distributions, Sangsangin has a trailing yield of approximately 3.1% on its current stock price of ₩6460. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Sangsangin

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. Sangsangin is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Sangsangin's earnings have been skyrocketing, up 28% per annum for the past five years.

Given that Sangsangin has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

Should investors buy Sangsangin for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Sangsangin more closely.

So while Sangsangin looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Sangsangin 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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