Cheil Grinding Wheel Ind. Co., Ltd. (KRX:001560) Will Pay A ₩220 Dividend In Four Days

Cheil Grinding Wheel Ind. Co., Ltd. (KRX:001560) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 6th of April.

Cheil Grinding Wheel Ind's next dividend payment will be ₩220 per share, on the back of last year when the company paid a total of ₩220 to shareholders. Last year's total dividend payments show that Cheil Grinding Wheel Ind has a trailing yield of 3.0% on the current share price of ₩7340. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Cheil Grinding Wheel Ind

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. Cheil Grinding Wheel Ind paid out a comfortable 40% of its profit last year. 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 28% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Cheil Grinding Wheel Ind'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 Cheil Grinding Wheel Ind paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Cheil Grinding Wheel Ind's earnings per share have dropped 8.5% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Given that Cheil Grinding Wheel Ind has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Has Cheil Grinding Wheel Ind got what it takes to maintain its dividend payments? Cheil Grinding Wheel Ind has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, Cheil Grinding Wheel Ind looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in Cheil Grinding Wheel Ind for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 3 warning signs for Cheil Grinding Wheel Ind that you should be aware of before investing in their 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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