Boditech Med (KOSDAQ:206640) Will Pay A Smaller Dividend Than Last Year

Boditech Med Inc.'s (KOSDAQ:206640) dividend is being reduced by 25% to ₩150.00 per share on 1st of January, in comparison to last year's comparable payment of ₩200.00. Based on this payment, the dividend yield will be 1.3%, which is lower than the average for the industry.

Check out our latest analysis for Boditech Med

Boditech Med's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Boditech Med was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 86.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 7.8%, which is in the range that makes us comfortable with the sustainability of the dividend.

Boditech Med's Dividend Has Lacked Consistency

Boditech Med has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2020, the annual payment back then was ₩50.00, compared to the most recent full-year payment of ₩200.00. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. Boditech Med has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Boditech Med has seen EPS rising for the last five years, at 48% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Boditech Med's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Boditech Med has the makings of a solid income stock moving forward. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Boditech Med that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated 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.