Should Income Investors Look At Eagon Holdings Co.,Ltd (KOSDAQ:039020) Before Its Ex-Dividend?

It looks like Eagon Holdings Co.,Ltd (KOSDAQ:039020) is about to go 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 29th of April.

Eagon HoldingsLtd's upcoming dividend is ₩70.00 a share, following on from the last 12 months, when the company distributed a total of ₩70.00 per share to shareholders. Based on the last year's worth of payments, Eagon HoldingsLtd stock has a trailing yield of around 2.4% on the current share price of ₩2870. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Eagon HoldingsLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Eagon HoldingsLtd

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Eagon HoldingsLtd reported a loss last year, so it's not great to see that it has continued paying a dividend. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Eagon HoldingsLtd didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Eagon HoldingsLtd reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Eagon HoldingsLtd has seen its dividend decline 1.3% per annum on average over the past 10 years, which is not great to see.

We update our analysis on Eagon HoldingsLtd every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Should investors buy Eagon HoldingsLtd for the upcoming dividend? It's hard to get used to Eagon HoldingsLtd paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Eagon HoldingsLtd's dividend merits.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. To help with this, we've discovered 3 warning signs for Eagon HoldingsLtd (1 is a bit concerning!) that you ought to be aware of before buying the shares.

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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