Meritz Fire & Marine Insurance Co., Ltd. (KRX:000060) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Meritz Fire & Marine Insurance Co., Ltd. (KRX:000060) stock is about to trade ex-dividend in 4 days. You will need to purchase shares before the 29th of December to receive the dividend, which will be paid on the 25th of March.

Meritz Fire & Marine Insurance's next dividend payment will be ₩850 per share, and in the last 12 months, the company paid a total of ₩850 per share. Looking at the last 12 months of distributions, Meritz Fire & Marine Insurance has a trailing yield of approximately 5.2% on its current stock price of ₩16450. 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.

View our latest analysis for Meritz Fire & Marine Insurance

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Meritz Fire & Marine Insurance has a low and conservative payout ratio of just 25% of its income after tax.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Meritz Fire & Marine Insurance paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Meritz Fire & Marine Insurance has grown its earnings rapidly, up 25% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Meritz Fire & Marine Insurance has lifted its dividend by approximately 11% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Should investors buy Meritz Fire & Marine Insurance for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Meritz Fire & Marine Insurance looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Meritz Fire & Marine Insurance for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 2 warning signs for Meritz Fire & Marine Insurance that you should be aware of before investing in their shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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