Mirae Asset Securities' (KRX:006800) Dividend Will Be Increased To ₩250.00

The board of Mirae Asset Securities Co., Ltd. (KRX:006800) has announced that it will be increasing its dividend by 67% on the 1st of January to ₩250.00, up from last year's comparable payment of ₩150.00. Although the dividend is now higher, the yield is only 1.5%, which is below the industry average.

Check out our latest analysis for Mirae Asset Securities

Mirae Asset Securities' Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Mirae Asset Securities' earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share is forecast to rise exponentially over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, so there isn't too much pressure on the dividend.

Mirae Asset Securities' Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The annual payment during the last 7 years was ₩220.00 in 2018, and the most recent fiscal year payment was ₩150.00. Doing the maths, this is a decline of about 5.3% per year. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Is Doubtful

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Over the past five years, it looks as though Mirae Asset Securities' EPS has declined at around 8.3% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. 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

Overall, we always like to see the dividend being raised, but we don't think Mirae Asset Securities will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Mirae Asset Securities is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 4 warning signs for Mirae Asset Securities you should be aware of, and 2 of them are a bit unpleasant. Is Mirae Asset 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.