Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Sunjin Co.,Ltd. (KRX:136490) is about to go ex-dividend in just three days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 10th of April.
SunjinLtd's next dividend payment will be ₩50.00 per share, and in the last 12 months, the company paid a total of ₩50.00 per share. Calculating the last year's worth of payments shows that SunjinLtd has a trailing yield of 0.5% on the current share price of ₩10900. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for SunjinLtd
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. SunjinLtd is paying out just 1.6% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. Luckily it paid out just 5.4% of its free 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 SunjinLtd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, SunjinLtd's earnings per share have been growing at 16% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the SunjinLtd dividends are largely the same as they were five years ago.
To Sum It Up
From a dividend perspective, should investors buy or avoid SunjinLtd? It's great that SunjinLtd 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. SunjinLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
On that note, you'll want to research what risks SunjinLtd is facing. For example, we've found 1 warning sign for SunjinLtd that we recommend you consider before investing in the business.
If you're in the market for dividend stocks, we recommend checking our list of top 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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About KOSE:A136490
SunjinLtd
Produces and sells prepared animal feed in South Korea and internationally.
Good value with adequate balance sheet.
