Kumho Petro ChemicalLtd (KRX:011780) Has Affirmed Its Dividend Of ₩2200.00

Kumho Petro Chemical Co.,Ltd's (KRX:011780) investors are due to receive a payment of ₩2200.00 per share on 16th of April. This means that the annual payment will be 2.0% of the current stock price, which is in line with the average for the industry.

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Kumho Petro ChemicalLtd's Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last payment, Kumho Petro ChemicalLtd was paying only paying out a fraction of earnings, but the payment was a massive 1,624% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS is forecast to expand by 109.0%. If the dividend continues on this path, the payout ratio could be 13% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Kumho Petro ChemicalLtd

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ₩1500.00 in 2015 to the most recent total annual payment of ₩2200.00. This means that it has been growing its distributions at 3.9% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Kumho Petro ChemicalLtd's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

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 Kumho Petro ChemicalLtd's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Kumho Petro ChemicalLtd that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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