KEPCO Plant Service & EngineeringLtd (KRX:051600) Has Affirmed Its Dividend Of ₩2469.00

KEPCO Plant Service & Engineering Co.,Ltd.'s (KRX:051600) investors are due to receive a payment of ₩2469.00 per share on 27th of April. Based on this payment, the dividend yield on the company's stock will be 5.0%, which is an attractive boost to shareholder returns.

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KEPCO Plant Service & EngineeringLtd's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before this announcement, KEPCO Plant Service & EngineeringLtd was paying out 85% of earnings, but a comparatively small 58% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

The next year is set to see EPS grow by 52.7%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 58% which would be quite comfortable going to take the dividend forward.

View our latest analysis for KEPCO Plant Service & EngineeringLtd

KEPCO Plant Service & EngineeringLtd's Dividend Has Lacked Consistency

It's comforting to see that KEPCO Plant Service & EngineeringLtd has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2019, the annual payment back then was ₩1790.00, compared to the most recent full-year payment of ₩2469.00. This works out to be a compound annual growth rate (CAGR) of approximately 5.5% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

KEPCO Plant Service & EngineeringLtd May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Over the past five years, it looks as though KEPCO Plant Service & EngineeringLtd's EPS has declined at around 3.7% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On KEPCO Plant Service & EngineeringLtd's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for KEPCO Plant Service & EngineeringLtd that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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