Read This Before Considering LTC Co.,Ltd (KOSDAQ:170920) For Its Upcoming ₩100.00 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 LTC Co.,Ltd (KOSDAQ:170920) is about to go ex-dividend in just 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 17th of April.

LTCLtd's next dividend payment will be ₩100.00 per share, and in the last 12 months, the company paid a total of ₩100.00 per share. Looking at the last 12 months of distributions, LTCLtd has a trailing yield of approximately 0.8% on its current stock price of ₩11950. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether LTCLtd can afford its dividend, and if the dividend could grow.

See our latest analysis for LTCLtd

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. That's why it's good to see LTCLtd paying out a modest 37% of its earnings. 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. The good news is it paid out just 9.1% of its free cash flow in the last year.

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 how much of its profit LTCLtd 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. LTCLtd's earnings per share have fallen at approximately 29% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

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

To Sum It Up

Should investors buy LTCLtd for the upcoming dividend? 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. In summary, while it has some positive characteristics, we're not inclined to race out and buy LTCLtd today.

On that note, you'll want to research what risks LTCLtd is facing. Every company has risks, and we've spotted 4 warning signs for LTCLtd (of which 2 are a bit unpleasant!) you should know about.

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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