Victek (KOSDAQ:065450) Will Pay A Dividend Of ₩30.00

Victek Co., Ltd. (KOSDAQ:065450) has announced that it will pay a dividend of ₩30.00 per share on the 14th of April. This means the dividend yield will be fairly typical at 0.8%.

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Victek's Projected Earnings Seem Likely To Cover Future Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Victek is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

If the trend of the last few years continues, EPS will grow by 160.4% over the next 12 months. If the dividend continues on this path, the payout ratio could be 9.5% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Victek

Victek Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. The business has been going well, which we can see by the fact that EPS has risen by 160% in the last year. We're glad to see EPS up on last year, but we're conscious that growth rates typically slow as companies increase in size. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Victek is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 4 warning signs for Victek (of which 1 makes us a bit uncomfortable!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.