Is It Worth Considering DL E&C Co.,Ltd. (KRX:375500) For Its Upcoming Dividend?

DL E&C Co.,Ltd. (KRX:375500) stock is about to trade ex-dividend in three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase DL E&CLtd's shares on or after the 27th of December will not receive the dividend, which will be paid on the 21st of April.

The company's next dividend payment will be ₩500.00 per share, and in the last 12 months, the company paid a total of ₩500 per share. Looking at the last 12 months of distributions, DL E&CLtd has a trailing yield of approximately 1.6% on its current stock price of ₩31900.00. If you buy this business for its dividend, you should have an idea of whether DL E&CLtd's dividend is reliable and sustainable. So we need to investigate whether DL E&CLtd can afford its dividend, and if the dividend could grow.

View our latest analysis for DL E&CLtd

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. DL E&CLtd has a low and conservative payout ratio of just 22% of its income after tax. 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. Luckily it paid out just 3.4% of its free cash flow last year.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. DL E&CLtd's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 31% a year over the past three years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. DL E&CLtd's dividend payments per share have declined at 28% per year on average over the past three 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.

To Sum It Up

Is DL E&CLtd worth buying for its dividend? DL E&CLtd 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. To summarise, DL E&CLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in DL E&CLtd for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 4 warning signs for DL E&CLtd that you should be aware of before investing in their shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.