Chonbang (KRX:000950) Is Paying Out A Dividend Of ₩1000.00

Chonbang Co., Ltd. (KRX:000950) will pay a dividend of ₩1000.00 on the 9th of April. This payment means that the dividend yield will be 2.9%, which is around the industry average.

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Chonbang's Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Chonbang is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS could expand by 28.1% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 2.6% by next year, which is in a pretty sustainable range.

View our latest analysis for Chonbang

Chonbang Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The most recent annual payment of ₩1000.00 is about the same as the annual payment 3 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Chonbang has grown earnings per share at 28% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Chonbang's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Chonbang you should be aware of, and 1 of them can't be ignored. Is Chonbang not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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