Kyungdong Invest Co., Ltd (KRX:012320) Pays A ₩500 Dividend In Just Four Days

Kyungdong Invest Co., Ltd (KRX:012320) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 29th of December, you won't be eligible to receive this dividend, when it is paid on the 24th of April.

Kyungdong Invest's next dividend payment will be ₩500 per share, on the back of last year when the company paid a total of ₩500 to shareholders. Looking at the last 12 months of distributions, Kyungdong Invest has a trailing yield of approximately 1.6% on its current stock price of ₩31300. If you buy this business for its dividend, you should have an idea of whether Kyungdong Invest's dividend is reliable and sustainable. So we need to investigate whether Kyungdong Invest can afford its dividend, and if the dividend could grow.

View our latest analysis for Kyungdong Invest

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Kyungdong Invest has a low and conservative payout ratio of just 21% of its income after tax. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. What's good is that dividends were well covered by free cash flow, with the company paying out 4.2% of its 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 fall far enough, the company could be forced to cut its dividend. Kyungdong Invest's earnings per share have plummeted approximately 35% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Kyungdong Invest's dividend payments per share have declined at 5.8% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid Kyungdong Invest? Kyungdong Invest has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. All things considered, we are not particularly enthused about Kyungdong Invest from a dividend perspective.

So while Kyungdong Invest looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, Kyungdong Invest has 3 warning signs (and 1 which can't be ignored) we think you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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