BORATR (KOSDAQ:250000) Could Be A Buy For Its Upcoming Dividend

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 BORATR CO., Ltd. (KOSDAQ:250000) is about to go ex-dividend in just three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase BORATR's shares before the 27th of December in order to receive the dividend, which the company will pay on the 24th of April.

The company's next dividend payment will be ₩250.00 per share. Last year, in total, the company distributed ₩250 to shareholders. Last year's total dividend payments show that BORATR has a trailing yield of 2.5% on the current share price of ₩9930.00. 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 BORATR can afford its dividend, and if the dividend could grow.

See our latest analysis for BORATR

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. BORATR paid out just 16% 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. Over the last year it paid out 62% of its free cash flow as dividends, within the usual range for most companies.

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 BORATR paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see BORATR's earnings per share have risen 16% per annum over the last five years. BORATR has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past five years, BORATR has increased its dividend at approximately 11% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Should investors buy BORATR for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, BORATR paid out less than half its earnings and a bit over half its free cash flow. BORATR looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks BORATR is facing. Our analysis shows 1 warning sign for BORATR and you should be aware of it before buying any shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.