Be Sure To Check Out CS Holdings Co., Ltd. (KRX:000590) Before It Goes Ex-Dividend

Readers hoping to buy CS Holdings Co., Ltd. (KRX:000590) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase CS Holdings' shares on or after the 27th of December, you won't be eligible to receive the dividend, when it is paid on the 22nd of April.

The company's upcoming dividend is ₩500.00 a share, following on from the last 12 months, when the company distributed a total of ₩500 per share to shareholders. Looking at the last 12 months of distributions, CS Holdings has a trailing yield of approximately 0.7% on its current stock price of ₩68300.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether CS Holdings has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for CS Holdings

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. CS Holdings is paying out just 2.6% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. What's good is that dividends were well covered by free cash flow, with the company paying out 2.5% of its cash flow last year.

It's positive to see that CS Holdings'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 CS Holdings 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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see CS Holdings has grown its earnings rapidly, up 29% a year for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, CS Holdings looks like a promising growth company.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. CS Holdings's dividend payments are effectively flat on where they were five years ago.

Final Takeaway

Has CS Holdings got what it takes to maintain its dividend payments? CS Holdings has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

In light of that, while CS Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for CS Holdings you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.