Interested In Hy-Lok Corporation Ltd's (KOSDAQ:013030) Upcoming ₩500 Dividend? You Have Four Days Left

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Hy-Lok Corporation ,Ltd. (KOSDAQ:013030) is about to go ex-dividend in just 4 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 17th of April.

Hy-Lok Corporation Ltd's upcoming dividend is ₩500 a share, following on from the last 12 months, when the company distributed a total of ₩500 per share to shareholders. Calculating the last year's worth of payments shows that Hy-Lok Corporation Ltd has a trailing yield of 3.5% on the current share price of ₩14300. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Hy-Lok Corporation Ltd can afford its dividend, and if the dividend could grow.

View our latest analysis for Hy-Lok Corporation Ltd

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. Hy-Lok Corporation Ltd paid out more than half (71%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 43% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Hy-Lok Corporation Ltd'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 Hy-Lok Corporation Ltd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Hy-Lok Corporation Ltd's earnings per share have fallen at approximately 24% 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Hy-Lok Corporation Ltd has lifted its dividend by approximately 17% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

Final Takeaway

Has Hy-Lok Corporation Ltd got what it takes to maintain its dividend payments? 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 Hy-Lok Corporation Ltd from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Hy-Lok Corporation Ltd, you should know about the other risks facing this business. Every company has risks, and we've spotted 3 warning signs for Hy-Lok Corporation Ltd (of which 1 doesn't sit too well with us!) you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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