Dongil Industries Co.,Ltd. (KRX:004890) Pays A ₩750 Dividend In Just Four Days

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 Dongil Industries Co.,Ltd. (KRX:004890) is about to go ex-dividend in just four 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 9th of April.

Dongil IndustriesLtd's next dividend payment will be ₩750 per share, on the back of last year when the company paid a total of ₩750 to shareholders. Last year's total dividend payments show that Dongil IndustriesLtd has a trailing yield of 1.0% on the current share price of ₩75400. If you buy this business for its dividend, you should have an idea of whether Dongil IndustriesLtd's dividend is reliable and sustainable. So we need to investigate whether Dongil IndustriesLtd can afford its dividend, and if the dividend could grow.

See our latest analysis for Dongil IndustriesLtd

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. Dongil IndustriesLtd paid out more than half (62%) of its earnings last year, which is a regular payout ratio for most companies. 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. Luckily it paid out just 6.9% of its free cash flow last year.

It's positive to see that Dongil IndustriesLtd'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 Dongil IndustriesLtd 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. Readers will understand then, why we're concerned to see Dongil IndustriesLtd's earnings per share have dropped 24% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Dongil IndustriesLtd has seen its dividend decline 5.0% per annum on average over the past 10 years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

To Sum It Up

Is Dongil IndustriesLtd an attractive dividend stock, or better left on the shelf? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

If you want to look further into Dongil IndustriesLtd, it's worth knowing the risks this business faces. To that end, you should learn about the 4 warning signs we've spotted with Dongil IndustriesLtd (including 1 which makes us a bit uncomfortable).

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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