Why You Might Be Interested In Daehan Flour Mills Co.,Ltd (KRX:001130) For Its Upcoming Dividend

Daehan Flour Mills Co.,Ltd (KRX:001130) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. In other words, investors can purchase Daehan Flour MillsLtd's shares before the 27th of December in order to be eligible for the dividend, which will be paid on the 15th of April.

The company's next dividend payment will be ₩2500.00 per share, and in the last 12 months, the company paid a total of ₩2,500 per share. Based on the last year's worth of payments, Daehan Flour MillsLtd has a trailing yield of 2.0% on the current stock price of ₩127000.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Daehan Flour MillsLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Daehan Flour MillsLtd is paying out just 4.5% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Daehan Flour MillsLtd generated enough free cash flow to afford its dividend. Luckily it paid out just 8.3% of its free cash flow last year.

It's positive to see that Daehan Flour MillsLtd'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 Daehan Flour MillsLtd 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Daehan Flour MillsLtd's earnings per share have risen 13% per annum over the last five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Daehan Flour MillsLtd dividends are largely the same as they were five years ago.

Final Takeaway

Should investors buy Daehan Flour MillsLtd for the upcoming dividend? It's great that Daehan Flour MillsLtd is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about Daehan Flour MillsLtd, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Daehan Flour MillsLtd is facing. For example, we've found 1 warning sign for Daehan Flour MillsLtd that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.