Don't Race Out To Buy Jeil Technos Co.,Ltd (KOSDAQ:038010) Just Because It's Going Ex-Dividend

Jeil Technos Co.,Ltd (KOSDAQ:038010) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 29th of December in order to be eligible for this dividend, which will be paid on the 20th of April.

Jeil TechnosLtd's next dividend payment will be ₩90.00 per share, on the back of last year when the company paid a total of ₩90.00 to shareholders. Calculating the last year's worth of payments shows that Jeil TechnosLtd has a trailing yield of 1.3% on the current share price of ₩6930. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Jeil TechnosLtd

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. Jeil TechnosLtd paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Jeil TechnosLtd didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Luckily it paid out just 6.0% of its free cash flow last year.

Click here to see how much of its profit Jeil TechnosLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Jeil TechnosLtd reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Jeil TechnosLtd has increased its dividend at approximately 14% a year on average.

We update our analysis on Jeil TechnosLtd every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Jeil TechnosLtd? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." It's not that we think Jeil TechnosLtd is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

So if you're still interested in Jeil TechnosLtd despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Be aware that Jeil TechnosLtd is showing 5 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

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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