Hyosung TNC Corporation (KRX:298020) Passed Our Checks, And It's About To Pay A ₩2,000 Dividend

It looks like Hyosung TNC Corporation (KRX:298020) is about to go ex-dividend in the next 2 days. Investors can purchase shares before the 29th of December in order to be eligible for this dividend, which will be paid on the 24th of March.

Hyosung TNC's upcoming dividend is ₩2,000 a share, following on from the last 12 months, when the company distributed a total of ₩2,000 per share to shareholders. Looking at the last 12 months of distributions, Hyosung TNC has a trailing yield of approximately 1.0% on its current stock price of ₩198500. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Hyosung TNC

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hyosung TNC paid out just 10% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 5.0% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Hyosung TNC'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 the company's payout ratio, plus analyst estimates of its future dividends.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why we're glad to see earnings per share up 19% over the past 12 months. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last two years, Hyosung TNC has lifted its dividend by approximately 41% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

From a dividend perspective, should investors buy or avoid Hyosung TNC? Hyosung TNC 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. It's a promising combination that should mark this company worthy of closer attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Case in point: We've spotted 3 warning signs for Hyosung TNC you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you’re looking to trade Hyosung TNC, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.