GRITEE, Inc. (KOSDAQ:204020) Stock Goes Ex-Dividend In Just Three Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that GRITEE, Inc. (KOSDAQ:204020) is about to go ex-dividend in just 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 20th of April.

GRITEE's next dividend payment will be ₩30.00 per share, and in the last 12 months, the company paid a total of ₩30.00 per share. Based on the last year's worth of payments, GRITEE stock has a trailing yield of around 1.0% on the current share price of ₩2990. If you buy this business for its dividend, you should have an idea of whether GRITEE'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.

View our latest analysis for GRITEE

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately GRITEE's payout ratio is modest, at just 27% of profit. A useful secondary check can be to evaluate whether GRITEE generated enough free cash flow to afford its dividend. Luckily it paid out just 19% of its free cash flow last year.

It's positive to see that GRITEE'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 GRITEE paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by GRITEE's 24% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

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

The Bottom Line

Should investors buy GRITEE for the upcoming dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy GRITEE today.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, GRITEE has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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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