Here's What We Like About CROWNHAITAI HoldingsLtd's (KRX:005740) Upcoming Dividend

CROWNHAITAI Holdings Co.,Ltd. (KRX:005740) is about to trade ex-dividend in the next three days. The ex-dividend date occurs one day 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase CROWNHAITAI HoldingsLtd's shares before the 27th of December to receive the dividend, which will be paid on the 28th of April.

The company's next dividend payment will be ₩100.00 per share, on the back of last year when the company paid a total of ₩100.00 to shareholders. Based on the last year's worth of payments, CROWNHAITAI HoldingsLtd stock has a trailing yield of around 1.8% on the current share price of ₩5640.00. If you buy this business for its dividend, you should have an idea of whether CROWNHAITAI HoldingsLtd's dividend is reliable and sustainable. As a result, readers should always check whether CROWNHAITAI HoldingsLtd has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for CROWNHAITAI HoldingsLtd

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. CROWNHAITAI HoldingsLtd paid out just 7.1% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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 11% of its cash flow 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 how much of its profit CROWNHAITAI HoldingsLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see CROWNHAITAI HoldingsLtd has grown its earnings rapidly, up 28% a year for the past five years. CROWNHAITAI HoldingsLtd earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. CROWNHAITAI HoldingsLtd's dividend payments per share have declined at 4.1% per year on average over the past 10 years, which is uninspiring. CROWNHAITAI HoldingsLtd is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Should investors buy CROWNHAITAI HoldingsLtd for the upcoming dividend? CROWNHAITAI HoldingsLtd has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. CROWNHAITAI HoldingsLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while CROWNHAITAI HoldingsLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 3 warning signs for CROWNHAITAI HoldingsLtd that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.