KginicisLtd's (KOSDAQ:035600) Dividend Will Be ₩500.00

Kginicis Co.,Ltd (KOSDAQ:035600) will pay a dividend of ₩500.00 on the 20th of April. The dividend yield will be 4.9% based on this payment which is still above the industry average.

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KginicisLtd's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, KginicisLtd's dividend was only 39% of earnings, however it was paying out 1,053% of free cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

Looking forward, earnings per share is forecast to rise by 152.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 17% by next year, which is in a pretty sustainable range.

View our latest analysis for KginicisLtd

KginicisLtd Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. Since 2019, the annual payment back then was ₩300.00, compared to the most recent full-year payment of ₩500.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.9% a year over that time. KginicisLtd has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Dividend Growth Is Doubtful

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, KginicisLtd's earnings per share has shrunk at approximately 9.4% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about KginicisLtd'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 be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for KginicisLtd that investors need to be conscious of moving forward. Is KginicisLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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