Should You Buy Nice D&B Co., Ltd. (KOSDAQ:130580) For Its Upcoming Dividend?

Nice D&B Co., Ltd. (KOSDAQ:130580) is about to trade ex-dividend in the next three days. If you purchase the stock on or after the 29th of December, you won't be eligible to receive this dividend, when it is paid on the 27th of April.

Nice D&B's next dividend payment will be ₩175 per share. Last year, in total, the company distributed ₩175 to shareholders. Based on the last year's worth of payments, Nice D&B has a trailing yield of 1.8% on the current stock price of ₩9750. If you buy this business for its dividend, you should have an idea of whether Nice D&B's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Nice D&B

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Nice D&B paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 17% of its cash flow last year.

It's positive to see that Nice D&B'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 Nice D&B paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Nice D&B has grown its earnings rapidly, up 26% a year for the past five years. Nice D&B earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Given that Nice D&B has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

Is Nice D&B worth buying for its dividend? Nice D&B has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks Nice D&B is facing. In terms of investment risks, we've identified 1 warning sign with Nice D&B and understanding them should be part of your investment process.

If you're in the market for dividend stocks, we recommend checking our list of top 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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