Income Investors Should Know That Korea Electronic Certification Authority, Inc. (KOSDAQ:041460) Goes Ex-Dividend Soon

It looks like Korea Electronic Certification Authority, Inc. (KOSDAQ:041460) is about to go ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 10th of April.

Korea Electronic Certification Authority's next dividend payment will be ₩46.00 per share, on the back of last year when the company paid a total of ₩46.00 to shareholders. Based on the last year's worth of payments, Korea Electronic Certification Authority stock has a trailing yield of around 0.8% on the current share price of ₩6100. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Korea Electronic Certification Authority has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Korea Electronic Certification Authority

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. Korea Electronic Certification Authority is paying out an acceptable 62% of its profit, a common payout level among most companies. 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 35% 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 Electronic Certification Authority paid out over the last 12 months.

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. Readers will understand then, why we're concerned to see Korea Electronic Certification Authority's earnings per share have dropped 15% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Given that Korea Electronic Certification Authority has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

From a dividend perspective, should investors buy or avoid Korea Electronic Certification Authority? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. In summary, it's hard to get excited about Korea Electronic Certification Authority from a dividend perspective.

If you want to look further into Korea Electronic Certification Authority, it's worth knowing the risks this business faces. For instance, we've identified 3 warning signs for Korea Electronic Certification Authority (1 is a bit concerning) 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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