Samyang Holdings Corporation (KRX:000070) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Samyang Holdings Corporation (KRX:000070) 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 13th of April.

Samyang Holdings's upcoming dividend is ₩2,000 a share, following on from the last 12 months, when the company distributed a total of ₩2,000 per share to shareholders. Last year's total dividend payments show that Samyang Holdings has a trailing yield of 2.7% on the current share price of ₩74900. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Samyang Holdings can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Samyang Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Samyang Holdings's payout ratio is modest, at just 49% of profit. 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. It distributed 48% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Samyang Holdings'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 Samyang Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Samyang Holdings has grown its earnings rapidly, up 66% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Samyang Holdings has delivered 1.5% dividend growth per year on average over the past nine years. Earnings per share have been growing much quicker than dividends, potentially because Samyang Holdings is keeping back more of its profits to grow the business.

To Sum It Up

Is Samyang Holdings an attractive dividend stock, or better left on the shelf? We love that Samyang Holdings is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Samyang Holdings looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Samyang Holdings for the dividends alone, you should always be mindful of the risks involved. We've identified 2 warning signs with Samyang Holdings (at least 1 which makes us a bit uncomfortable), and understanding them should be part of your investment process.

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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