Ghost Studio Co., Ltd. (KOSDAQ:950190) Stock Goes Ex-Dividend In Just Four Days

Ghost Studio Co., Ltd. (KOSDAQ:950190) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Ghost Studio's shares before the 27th of December in order to be eligible for the dividend, which will be paid on the 17th of April.

The company's upcoming dividend is ₩678.00 a share, following on from the last 12 months, when the company distributed a total of ₩681 per share to shareholders. Calculating the last year's worth of payments shows that Ghost Studio has a trailing yield of 7.5% on the current share price of ₩9070.00. If you buy this business for its dividend, you should have an idea of whether Ghost Studio's dividend is reliable and sustainable. So we need to investigate whether Ghost Studio can afford its dividend, and if the dividend could grow.

View our latest analysis for Ghost Studio

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Ghost Studio is paying out an acceptable 53% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Ghost Studio generated enough free cash flow to afford its dividend. Dividends consumed 59% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Ghost Studio's earnings per share have fallen at approximately 12% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Ghost Studio has seen its dividend decline 12% per annum on average over the past four years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

The Bottom Line

Has Ghost Studio got what it takes to maintain its dividend payments? While earnings per share are shrinking, it's encouraging to see that at least Ghost Studio's dividend appears sustainable, with earnings and cashflow payout ratios that are within reasonable bounds. Bottom line: Ghost Studio has some unfortunate characteristics that we think could lead to sub-optimal outcomes for dividend investors.

With that in mind though, if the poor dividend characteristics of Ghost Studio don't faze you, it's worth being mindful of the risks involved with this business. We've identified 4 warning signs with Ghost Studio (at least 1 which is potentially serious), and understanding them should be part of your investment process.

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.