Heerim Architects & Planners Co., Ltd. (KOSDAQ:037440) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Heerim Architects & Planners Co., Ltd. (KOSDAQ:037440) is about to go ex-dividend in the next three days. Investors can purchase shares before the 29th of December in order to be eligible for this dividend, which will be paid on the 23rd of April.

Heerim Architects & Planners's next dividend payment will be ₩150 per share, and in the last 12 months, the company paid a total of ₩150 per share. Based on the last year's worth of payments, Heerim Architects & Planners stock has a trailing yield of around 3.8% on the current share price of ₩3920. If you buy this business for its dividend, you should have an idea of whether Heerim Architects & Planners's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Heerim Architects & Planners

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Heerim Architects & Planners paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies. 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. The good news is it paid out just 7.2% of its free cash flow in the last year.

It's positive to see that Heerim Architects & Planners'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 how much of its profit Heerim Architects & Planners paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Heerim Architects & Planners's earnings have been skyrocketing, up 21% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Heerim Architects & Planners could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Heerim Architects & Planners has seen its dividend decline 2.8% per annum on average over the past 10 years, which is not great to see. Heerim Architects & Planners is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Is Heerim Architects & Planners an attractive dividend stock, or better left on the shelf? We like Heerim Architects & Planners's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Heerim Architects & Planners looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 2 warning signs for Heerim Architects & Planners that we recommend you consider before investing in the business.

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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