Four Days Left To Buy Moorim Paper Co., Ltd. (KRX:009200) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Moorim Paper Co., Ltd. (KRX:009200) is about to trade ex-dividend in the next four days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 14th of April.

Moorim Paper's upcoming dividend is ₩50.00 a share, following on from the last 12 months, when the company distributed a total of ₩50.00 per share to shareholders. Looking at the last 12 months of distributions, Moorim Paper has a trailing yield of approximately 1.9% on its current stock price of ₩2690. 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 Moorim Paper can afford its dividend, and if the dividend could grow.

See our latest analysis for Moorim Paper

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. Moorim Paper lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Moorim Paper didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out 7.3% of its free cash flow as dividends last year, which is conservatively low.

Click here to see how much of its profit Moorim Paper paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Moorim Paper reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Moorim Paper has seen its dividend decline 16% per annum on average over the past 10 years, which is not great to see.

Get our latest analysis on Moorim Paper's balance sheet health here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Moorim Paper? It's hard to get used to Moorim Paper paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. To summarise, Moorim Paper looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you're not too concerned about Moorim Paper's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Be aware that Moorim Paper is showing 2 warning signs in our investment analysis, and 1 of those can't be ignored...

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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