Here's What We Like About BIT Computer's (KOSDAQ:032850) Upcoming Dividend

BIT Computer Co., Ltd (KOSDAQ:032850) stock is about to trade ex-dividend in 3 days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 9th of April.

BIT Computer's next dividend payment will be ₩61.00 per share. Last year, in total, the company distributed ₩61.00 to shareholders. Calculating the last year's worth of payments shows that BIT Computer has a trailing yield of 0.5% on the current share price of ₩11400. If you buy this business for its dividend, you should have an idea of whether BIT Computer's dividend is reliable and sustainable. So we need to investigate whether BIT Computer can afford its dividend, and if the dividend could grow.

See our latest analysis for BIT Computer

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. BIT Computer is paying out just 17% 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 BIT Computer generated enough free cash flow to afford its dividend. The good news is it paid out just 12% of its free cash flow in the last year.

It's positive to see that BIT Computer'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 BIT Computer 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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see BIT Computer's earnings have been skyrocketing, up 35% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, BIT Computer looks like a promising growth company.

Unfortunately BIT Computer has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

From a dividend perspective, should investors buy or avoid BIT Computer? BIT Computer has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

In light of that, while BIT Computer has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 2 warning signs with BIT Computer and understanding them should be part of your investment process.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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