Is It Worth Considering Ilsung Construction Co., Ltd. (KRX:013360) For Its Upcoming Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Ilsung Construction Co., Ltd. (KRX:013360) is about to trade ex-dividend in the next four days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 22nd of April.

Ilsung Construction's next dividend payment will be ₩15.00 per share, and in the last 12 months, the company paid a total of ₩15.00 per share. Last year's total dividend payments show that Ilsung Construction has a trailing yield of 1.3% on the current share price of ₩1125. If you buy this business for its dividend, you should have an idea of whether Ilsung Construction's dividend is reliable and sustainable. So we need to investigate whether Ilsung Construction can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Ilsung Construction

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Ilsung Construction paid out a comfortable 50% of its profit last year. 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. Ilsung Construction paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Click here to see how much of its profit Ilsung Construction paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Ilsung Construction's earnings per share have fallen at approximately 10% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Ilsung Construction's dividend payments per share have declined at 6.7% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Final Takeaway

Is Ilsung Construction an attractive dividend stock, or better left on the shelf? Ilsung Construction's earnings per share have fallen noticeably and, although it paid out less than half its profit as dividends last year, it paid out a disconcertingly high percentage of its cashflow, which is not a great combination. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.

With that in mind though, if the poor dividend characteristics of Ilsung Construction don't faze you, it's worth being mindful of the risks involved with this business. For example, we've found 4 warning signs for Ilsung Construction (1 makes us a bit uncomfortable!) that deserve your attention before investing in the shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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