There's A Lot To Like About Shindaeyang Paper's (KRX:016590) Upcoming ₩625 Dividend

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 Shindaeyang Paper Co., Ltd. (KRX:016590) is about to go ex-dividend in just 4 days. If you purchase the stock on or after the 29th of December, you won't be eligible to receive this dividend, when it is paid on the 14th of April.

Shindaeyang Paper's next dividend payment will be ₩625 per share, on the back of last year when the company paid a total of ₩625 to shareholders. Last year's total dividend payments show that Shindaeyang Paper has a trailing yield of 1.0% on the current share price of ₩62100. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Shindaeyang Paper can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Shindaeyang Paper

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Shindaeyang Paper has a low and conservative payout ratio of just 5.2% of its income after tax. A useful secondary check can be to evaluate whether Shindaeyang Paper generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 5.0% of its cash flow last year.

It's positive to see that Shindaeyang Paper'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 Shindaeyang Paper 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Shindaeyang Paper's earnings have been skyrocketing, up 21% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Shindaeyang Paper looks like a promising growth company.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Shindaeyang Paper has lifted its dividend by approximately 2.3% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Shindaeyang Paper is keeping back more of its profits to grow the business.

The Bottom Line

Is Shindaeyang Paper worth buying for its dividend? Shindaeyang Paper has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Shindaeyang Paper is facing. To help with this, we've discovered 1 warning sign for Shindaeyang Paper that you should be aware of before investing in their shares.

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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