Korea Refractories (KRX:010040) Has Announced A Dividend Of ₩100.00

Korea Refractories Co., Ltd's (KRX:010040) investors are due to receive a payment of ₩100.00 per share on 17th of April. The dividend yield will be 4.8% based on this payment which is still above the industry average.

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Korea Refractories' Distributions May Be Difficult To Sustain

If the payments aren't sustainable, a high yield for a few years won't matter that much. Korea Refractories is unprofitable despite paying a dividend, and it is paying out 1,671% of its free cash flow. These payout levels would generally be quite difficult to keep up.

Recent, EPS has fallen by 66.3%, so this could continue over the next year. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.

View our latest analysis for Korea Refractories

Korea Refractories Is Still Building Its Track Record

It is great to see that Korea Refractories has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2020, the dividend has gone from ₩35.00 total annually to ₩100.00. This means that it has been growing its distributions at 23% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Korea Refractories' earnings per share has shrunk at 66% a year over the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Korea Refractories' Dividend Doesn't Look Great

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for Korea Refractories (2 are potentially serious!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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