Daechang Forging (KRX:015230) Will Pay A Dividend Of ₩160.00

The board of Daechang Forging Co., Ltd. (KRX:015230) has announced that it will pay a dividend on the 22nd of April, with investors receiving ₩160.00 per share. Based on this payment, the dividend yield will be 2.5%, which is fairly typical for the industry.

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Daechang Forging's Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Daechang Forging's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 15.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 15%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Daechang Forging

Daechang Forging Doesn't Have A Long Payment History

Daechang Forging's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of ₩68.97 in 2019 to the most recent total annual payment of ₩160.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. 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 Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Daechang Forging has grown earnings per share at 15% per year over the past five years. Daechang Forging definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Daechang Forging Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on Daechang Forging management tenure, salary, and performance. 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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