Stock Analysis

Here's What We Like About Korea Export Packaging IndustrialLtd's (KRX:002200) Upcoming Dividend

KOSE:A002200
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Korea Export Packaging Industrial Co.,Ltd (KRX:002200) stock is about to trade ex-dividend in 4 days. If you purchase the stock on or after the 29th of December, you won't be eligible to receive this dividend, when it is paid on the 24th of April.

Korea Export Packaging IndustrialLtd's next dividend payment will be ₩600 per share, and in the last 12 months, the company paid a total of ₩600 per share. Looking at the last 12 months of distributions, Korea Export Packaging IndustrialLtd has a trailing yield of approximately 2.6% on its current stock price of ₩22800. If you buy this business for its dividend, you should have an idea of whether Korea Export Packaging IndustrialLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Korea Export Packaging IndustrialLtd

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. Korea Export Packaging IndustrialLtd paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 15% of its free cash flow in the last year.

It's positive to see that Korea Export Packaging IndustrialLtd's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Korea Export Packaging IndustrialLtd paid out over the last 12 months.

historic-dividend
KOSE:A002200 Historic Dividend December 24th 2020

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Korea Export Packaging IndustrialLtd's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Korea Export Packaging IndustrialLtd is retaining more than three-quarters of its earnings and has a history of generating some growth in earnings. We think this is a reasonable combination.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Korea Export Packaging IndustrialLtd has delivered an average of 1.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Is Korea Export Packaging IndustrialLtd an attractive dividend stock, or better left on the shelf? Earnings per share have been flat over this time, but we're intrigued to see that Korea Export Packaging IndustrialLtd is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and Korea Export Packaging IndustrialLtd is halfway there. Korea Export Packaging IndustrialLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while Korea Export Packaging IndustrialLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for Korea Export Packaging IndustrialLtd that we recommend you consider before investing in the business.

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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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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