Korea Electric Terminal Co., Ltd. (KRX:025540) Goes Ex-Dividend Soon

Korea Electric Terminal Co., Ltd. (KRX:025540) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 8th of April.

Korea Electric Terminal's next dividend payment will be ₩450 per share. Last year, in total, the company distributed ₩700 to shareholders. Last year's total dividend payments show that Korea Electric Terminal has a trailing yield of 1.2% on the current share price of ₩58200. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Korea Electric Terminal

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. Korea Electric Terminal is paying out just 20% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 30% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Korea Electric Terminal 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. So we're not too excited that Korea Electric Terminal's earnings are down 3.0% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Korea Electric Terminal has increased its dividend at approximately 8.8% a year on average.

To Sum It Up

Is Korea Electric Terminal an attractive dividend stock, or better left on the shelf? Korea Electric Terminal 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. In summary, it's hard to get excited about Korea Electric Terminal from a dividend perspective.

While it's tempting to invest in Korea Electric Terminal for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Korea Electric Terminal you should be aware of.

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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