Income Investors Should Know That Yonwoo Co., Ltd (KOSDAQ:115960) Goes Ex-Dividend Soon

Yonwoo Co., Ltd (KOSDAQ:115960) is about to trade ex-dividend in the next three days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 13th of April.

Yonwoo's next dividend payment will be ₩160 per share, on the back of last year when the company paid a total of ₩160 to shareholders. Looking at the last 12 months of distributions, Yonwoo has a trailing yield of approximately 0.8% on its current stock price of ₩19000. 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! As a result, readers should always check whether Yonwoo has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Yonwoo

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Yonwoo is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 7.0% 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?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by Yonwoo's 11% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Unfortunately Yonwoo has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is Yonwoo an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall, it's hard to get excited about Yonwoo from a dividend perspective.

While it's tempting to invest in Yonwoo for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for Yonwoo 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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