BOOKOOK Securities' (KRX:001270) Dividend Will Be ₩1500.00

The board of BOOKOOK Securities Co., Ltd. (KRX:001270) has announced that it will pay a dividend of ₩1500.00 per share on the 1st of January. This makes the dividend yield 5.6%, which will augment investor returns quite nicely.

Check out our latest analysis for BOOKOOK Securities

BOOKOOK Securities' Future Dividends May Potentially Be At Risk

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, the dividend made up 119% of earnings, and the company was generating negative free cash flows. This high of a dividend payment could start to put pressure on the balance sheet in the future.

If the company can't turn things around, EPS could fall by 16.2% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 153%, which could put the dividend under pressure if earnings don't start to improve.

BOOKOOK Securities Is Still Building Its Track Record

It is great to see that BOOKOOK Securities has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2019, the annual payment back then was ₩1200.00, compared to the most recent full-year payment of ₩1500.00. This implies that the company grew its distributions at a yearly rate of about 3.8% over that duration. 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 Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. BOOKOOK Securities' EPS has fallen by approximately 16% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

We're Not Big Fans Of BOOKOOK Securities' Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help BOOKOOK Securities make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, the dividend is not reliable enough to make this a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 4 warning signs for BOOKOOK Securities (of which 2 can't be ignored!) you should know about. Is BOOKOOK Securities not quite the opportunity you were looking for? Why not check out 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.