Sambo Corrugated Board Co., Ltd. (KOSDAQ:023600) Will Pay A ₩60.00 Dividend In Four Days

Sambo Corrugated Board Co., Ltd. (KOSDAQ:023600) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Sambo Corrugated Board's shares before the 13th of September to receive the dividend, which will be paid on the 2nd of October.

The company's next dividend payment will be ₩60.00 per share, and in the last 12 months, the company paid a total of ₩310 per share. Based on the last year's worth of payments, Sambo Corrugated Board has a trailing yield of 3.4% on the current stock price of ₩9190.00. If you buy this business for its dividend, you should have an idea of whether Sambo Corrugated Board's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Sambo Corrugated Board

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Sambo Corrugated Board is paying out just 10% 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 Sambo Corrugated Board generated enough free cash flow to afford its dividend. Sambo Corrugated Board paid out more free cash flow than it generated - 134%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

Sambo Corrugated Board does have a large net cash position on the balance sheet, which could fund large dividends for a time, if the company so chose. Still, smart investors know that it is better to assess dividends relative to the cash and profit generated by the business. Paying dividends out of cash on the balance sheet is not long-term sustainable.

While Sambo Corrugated Board's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Sambo Corrugated Board to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit Sambo Corrugated Board paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Sambo Corrugated Board's earnings per share have been shrinking at 3.7% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, five years ago, Sambo Corrugated Board has lifted its dividend by approximately 44% a year on average.

To Sum It Up

Has Sambo Corrugated Board got what it takes to maintain its dividend payments? It's disappointing to see earnings per share declining, and this would ordinarily be enough to discourage us from most dividend stocks, even though Sambo Corrugated Board is paying out less than half its income as dividends. However, it's also paying out an uncomfortably high percentage of its cash flow, which makes us wonder just how sustainable the dividend really is. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Sambo Corrugated Board.

With that in mind though, if the poor dividend characteristics of Sambo Corrugated Board don't faze you, it's worth being mindful of the risks involved with this business. For example - Sambo Corrugated Board has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.