There's A Lot To Like About WONIK MaterialsLtd's (KOSDAQ:104830) Upcoming ₩150 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that WONIK Materials Co.,Ltd. (KOSDAQ:104830) is about to go ex-dividend in just three days. Ex-dividend means that investors that purchase the stock on or after the 29th of December will not receive this dividend, which will be paid on the 21st of April.

WONIK MaterialsLtd's next dividend payment will be ₩150 per share, and in the last 12 months, the company paid a total of ₩150 per share. Last year's total dividend payments show that WONIK MaterialsLtd has a trailing yield of 0.4% on the current share price of ₩34600. If you buy this business for its dividend, you should have an idea of whether WONIK MaterialsLtd's dividend is reliable and sustainable. So we need to investigate whether WONIK MaterialsLtd can afford its dividend, and if the dividend could grow.

Check out our latest analysis for WONIK MaterialsLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. WONIK MaterialsLtd paid out just 6.4% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 7.6% of its free cash flow as dividends last year, which is conservatively low.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see WONIK MaterialsLtd earnings per share are up 6.9% per annum over the last five years. Earnings per share have been increasing steadily and management is reinvesting almost all of the profits back into the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.

Given that WONIK MaterialsLtd has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

From a dividend perspective, should investors buy or avoid WONIK MaterialsLtd? Earnings per share have been growing moderately, and WONIK MaterialsLtd is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but WONIK MaterialsLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. WONIK MaterialsLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while WONIK MaterialsLtd has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 1 warning sign with WONIK MaterialsLtd and understanding them should be part of your investment process.

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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