Genoray Co., Ltd. (KOSDAQ:122310) Looks Interesting, And It's About To Pay A Dividend

It looks like Genoray Co., Ltd. (KOSDAQ:122310) is about to go ex-dividend in the next three days. You will need to purchase shares before the 29th of December to receive the dividend, which will be paid on the 14th of April.

Genoray's next dividend payment will be ₩133 per share, and in the last 12 months, the company paid a total of ₩133 per share. Calculating the last year's worth of payments shows that Genoray has a trailing yield of 1.4% on the current share price of ₩9700. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Genoray has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Genoray

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Genoray has a low and conservative payout ratio of just 14% of its income after tax. A useful secondary check can be to evaluate whether Genoray generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 37% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Genoray'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 Genoray 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. It's encouraging to see Genoray has grown its earnings rapidly, up 55% a year for the past five years. Genoray is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

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

Final Takeaway

Has Genoray got what it takes to maintain its dividend payments? Genoray 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. There's a lot to like about Genoray, and we would prioritise taking a closer look at it.

In light of that, while Genoray has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Genoray and you should be aware of them before buying any shares.

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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