Stock Analysis

Here's What We Like About HITEJINRO's (KRX:000080) Upcoming Dividend

KOSE:A000080
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HITEJINRO Co., Ltd. (KRX:000080) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 29th of December to receive the dividend, which will be paid on the 10th of April.

HITEJINRO's upcoming dividend is ₩700 a share, following on from the last 12 months, when the company distributed a total of ₩700 per share to shareholders. Calculating the last year's worth of payments shows that HITEJINRO has a trailing yield of 2.2% on the current share price of ₩31650. If you buy this business for its dividend, you should have an idea of whether HITEJINRO's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for HITEJINRO

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. HITEJINRO paid out more than half (66%) of its earnings last year, which is a regular payout ratio for most companies. 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. The good news is it paid out just 19% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
KOSE:A000080 Historic Dividend December 24th 2020

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see HITEJINRO has grown its earnings rapidly, up 28% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, HITEJINRO could have strong prospects for future increases to the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. HITEJINRO's dividend payments per share have declined at 10.0% per year on average over the past 10 years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is HITEJINRO worth buying for its dividend? We like HITEJINRO's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. HITEJINRO looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while HITEJINRO looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 2 warning signs for HITEJINRO you should be aware of.

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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