Kyungdong Invest Co., Ltd (KRX:012320) Goes Ex-Dividend Soon

It looks like Kyungdong Invest Co., Ltd (KRX:012320) is about to go ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Kyungdong Invest's shares on or after the 27th of December will not receive the dividend, which will be paid on the 28th of April.

The company's next dividend payment will be ₩750.00 per share, on the back of last year when the company paid a total of ₩750 to shareholders. Looking at the last 12 months of distributions, Kyungdong Invest has a trailing yield of approximately 1.2% on its current stock price of ₩63100.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Kyungdong Invest has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Kyungdong Invest

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Kyungdong Invest is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 4.4% of its free cash flow last year.

It's positive to see that Kyungdong Invest'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 Kyungdong Invest paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Kyungdong Invest'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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last five years, Kyungdong Invest has lifted its dividend by approximately 8.4% a year on average.

The Bottom Line

Is Kyungdong Invest an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

While it's tempting to invest in Kyungdong Invest for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Kyungdong Invest you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.