Taekyung Chemical (KRX:006890) Is Due To Pay A Dividend Of ₩180.00

Taekyung Chemical Co., Ltd. (KRX:006890) has announced that it will pay a dividend of ₩180.00 per share on the 24th of April. This means the annual payment is 2.2% of the current stock price, which is above the average for the industry.

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Taekyung Chemical's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Taekyung Chemical's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 5.5% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could be 25%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Check out our latest analysis for Taekyung Chemical

Taekyung Chemical Doesn't Have A Long Payment History

It is great to see that Taekyung Chemical has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 8 years was ₩150.00 in 2017, and the most recent fiscal year payment was ₩180.00. This works out to be a compound annual growth rate (CAGR) of approximately 2.3% a year over that time. Taekyung Chemical hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth Is Doubtful

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. It's not great to see that Taekyung Chemical's earnings per share has fallen at approximately 5.5% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Taekyung Chemical's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 3 warning signs for Taekyung Chemical that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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