POSCO COATED & COLOR STEEL Co., Ltd. (KRX:058430) Is About To Go Ex-Dividend, And It Pays A 2.3% Yield

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see POSCO COATED & COLOR STEEL Co., Ltd. (KRX:058430) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 29th of December to receive the dividend, which will be paid on the 14th of April.

POSCO COATED & COLOR STEEL's next dividend payment will be ₩400 per share, and in the last 12 months, the company paid a total of ₩400 per share. Based on the last year's worth of payments, POSCO COATED & COLOR STEEL stock has a trailing yield of around 2.3% on the current share price of ₩17350. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for POSCO COATED & COLOR STEEL

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. POSCO COATED & COLOR STEEL paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 4.0% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that POSCO COATED & COLOR STEEL'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 POSCO COATED & COLOR STEEL paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by POSCO COATED & COLOR STEEL's 25% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. POSCO COATED & COLOR STEEL has seen its dividend decline 2.2% per annum on average over the past 10 years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Is POSCO COATED & COLOR STEEL worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of POSCO COATED & COLOR STEEL's dividend merits.

With that being said, if dividends aren't your biggest concern with POSCO COATED & COLOR STEEL, you should know about the other risks facing this business. For example, POSCO COATED & COLOR STEEL has 4 warning signs (and 1 which is significant) we think you should know about.

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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