Korea Parts & FastenersLtd (KOSDAQ:024880) Has Announced A Dividend Of ₩150.00

Korea Parts & Fasteners Co.,Ltd (KOSDAQ:024880) will pay a dividend of ₩150.00 on the 25th of April. This makes the dividend yield 3.5%, which will augment investor returns quite nicely.

Check out our latest analysis for Korea Parts & FastenersLtd

Korea Parts & FastenersLtd's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Korea Parts & FastenersLtd was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 27.2%. If the dividend continues on this path, the payout ratio could be 14% by next year, which we think can be pretty sustainable going forward.

Korea Parts & FastenersLtd's Dividend Has Lacked Consistency

It's comforting to see that Korea Parts & FastenersLtd has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of ₩160.00 in 2019 to the most recent total annual payment of ₩150.00. This works out to be a decline of approximately 1.1% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth May Be Hard To Achieve

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Korea Parts & FastenersLtd hasn't seen much change in its earnings per share over the last five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

In Summary

Overall, we think Korea Parts & FastenersLtd is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Korea Parts & FastenersLtd has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Korea Parts & FastenersLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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