Income Investors Should Know That Daewon Co., Ltd. (KOSDAQ:007680) Goes Ex-Dividend Soon

Daewon Co., Ltd. (KOSDAQ:007680) is about to trade ex-dividend in the next 4 days. Ex-dividend means that investors that purchase the stock on or after the 29th of December will not receive this dividend, which will be paid on the 10th of April.

Daewon's upcoming dividend is ₩250 a share, following on from the last 12 months, when the company distributed a total of ₩250 per share to shareholders. Last year's total dividend payments show that Daewon has a trailing yield of 2.6% on the current share price of ₩9480. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Daewon can afford its dividend, and if the dividend could grow.

View our latest analysis for Daewon

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 82% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline. 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. Dividends consumed 55% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 Daewon paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Daewon's earnings per share have plummeted approximately 57% a year over the previous five years.

Unfortunately Daewon has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Should investors buy Daewon for the upcoming dividend? While earnings per share are shrinking, it's encouraging to see that at least Daewon's dividend appears sustainable, with earnings and cashflow payout ratios that are within reasonable bounds. It's not that we think Daewon is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

So if you're still interested in Daewon despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. To help with this, we've discovered 6 warning signs for Daewon that you should be aware of before investing in their shares.

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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