There's A Lot To Like About Taekyung Chemical's (KRX:006890) Upcoming ₩150 Dividend

Taekyung Chemical Co., Ltd. (KRX:006890) stock is about to trade ex-dividend in four days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 10th of April.

Taekyung Chemical's next dividend payment will be ₩150 per share, and in the last 12 months, the company paid a total of ₩150 per share. Looking at the last 12 months of distributions, Taekyung Chemical has a trailing yield of approximately 1.1% on its current stock price of ₩13950. 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 check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Taekyung Chemical

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Taekyung Chemical paid out just 15% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Taekyung Chemical generated enough free cash flow to afford its dividend. The good news is it paid out just 5.8% 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 Taekyung Chemical paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Taekyung Chemical's earnings per share have risen 14% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Taekyung Chemical's dividend payments are broadly unchanged compared to where they were 10 years ago.

Final Takeaway

From a dividend perspective, should investors buy or avoid Taekyung Chemical? We love that Taekyung Chemical is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Taekyung Chemical is facing. Case in point: We've spotted 3 warning signs for Taekyung Chemical you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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