Income Investors Should Know That HYUNGKUK F&B Co., Ltd. (KOSDAQ:189980) Goes Ex-Dividend Soon

It looks like HYUNGKUK F&B Co., Ltd. (KOSDAQ:189980) is about to go ex-dividend in the next four days. The ex-dividend date generally occurs two days 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, HYUNGKUK F&B investors that purchase the stock on or after the 27th of June will not receive the dividend, which will be paid on the 16th of July.

The company's next dividend payment will be ₩30.00 per share, and in the last 12 months, the company paid a total of ₩70.00 per share. Calculating the last year's worth of payments shows that HYUNGKUK F&B has a trailing yield of 3.6% on the current share price of ₩1962.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see HYUNGKUK F&B paying out a modest 48% of its earnings. 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. It distributed 35% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that HYUNGKUK F&B'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.

Check out our latest analysis for HYUNGKUK F&B

Click here to see how much of its profit HYUNGKUK F&B paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about HYUNGKUK F&B's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past six years, HYUNGKUK F&B has increased its dividend at approximately 23% a year on average.

Final Takeaway

Has HYUNGKUK F&B got what it takes to maintain its dividend payments? While it's not great to see that earnings per share are effectively flat over the six-year period we checked, at least the payout ratios are low and conservative. All things considered, we are not particularly enthused about HYUNGKUK F&B from a dividend perspective.

In light of that, while HYUNGKUK F&B has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 3 warning signs with HYUNGKUK F&B (at least 1 which is potentially serious), and understanding them should be part of your investment process.

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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.