HANYANG ENGLtd (KOSDAQ:045100) Could Be A Buy For Its Upcoming Dividend

HANYANG ENG Co.,Ltd (KOSDAQ:045100) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase HANYANG ENGLtd's shares on or after the 27th of December will not receive the dividend, which will be paid on the 22nd of April.

The company's upcoming dividend is ₩600.00 a share, following on from the last 12 months, when the company distributed a total of ₩600 per share to shareholders. Calculating the last year's worth of payments shows that HANYANG ENGLtd has a trailing yield of 3.6% on the current share price of ₩16470.00. If you buy this business for its dividend, you should have an idea of whether HANYANG ENGLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for HANYANG ENGLtd

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. HANYANG ENGLtd has a low and conservative payout ratio of just 12% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that HANYANG ENGLtd'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 HANYANG ENGLtd 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at HANYANG ENGLtd, with earnings per share up 3.6% on average over the last five years. Earnings per share growth in recent times has not been a standout. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. HANYANG ENGLtd has delivered an average of 17% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Is HANYANG ENGLtd worth buying for its dividend? Earnings per share have been growing moderately, and HANYANG ENGLtd is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but HANYANG ENGLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about HANYANG ENGLtd, and we would prioritise taking a closer look at it.

Keen to explore more data on HANYANG ENGLtd's financial performance? Check out our visualisation of its historical revenue and earnings growth.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.