HD Hyundai Infracore Co., Ltd. (KRX:042670) Goes Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see HD Hyundai Infracore Co., Ltd. (KRX:042670) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase HD Hyundai Infracore's shares on or after the 27th of February will not receive the dividend, which will be paid on the 1st of January.

The company's next dividend payment will be ₩70.00 per share. Last year, in total, the company distributed ₩70.00 to shareholders. Based on the last year's worth of payments, HD Hyundai Infracore stock has a trailing yield of around 0.8% on the current share price of ₩8700.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for HD Hyundai Infracore

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see HD Hyundai Infracore paying out a modest 35% of its earnings. A useful secondary check can be to evaluate whether HD Hyundai Infracore generated enough free cash flow to afford its dividend. It paid out 7.4% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that HD Hyundai Infracore'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. HD Hyundai Infracore's earnings per share have plummeted approximately 39% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. HD Hyundai Infracore's dividend payments per share have declined at 46% per year on average over the past two years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

Should investors buy HD Hyundai Infracore for the upcoming dividend? HD Hyundai Infracore 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. All things considered, we are not particularly enthused about HD Hyundai Infracore from a dividend perspective.

While it's tempting to invest in HD Hyundai Infracore for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 2 warning signs with HD Hyundai Infracore and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.