Why You Might Be Interested In POSCO STEELEON Co., Ltd. (KRX:058430) For Its Upcoming Dividend

POSCO STEELEON Co., Ltd. (KRX:058430) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase POSCO STEELEON's shares on or after the 27th of March, you won't be eligible to receive the dividend, when it is paid on the 24th of April.

The company's next dividend payment will be ₩2160.00 per share, and in the last 12 months, the company paid a total of ₩1,615 per share. Calculating the last year's worth of payments shows that POSCO STEELEON has a trailing yield of 3.5% on the current share price of ₩45700.00. If you buy this business for its dividend, you should have an idea of whether POSCO STEELEON's dividend is reliable and sustainable. As a result, readers should always check whether POSCO STEELEON has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately POSCO STEELEON's payout ratio is modest, at just 35% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 40% of its free cash flow as dividends, a comfortable payout level for most companies.

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.

View our latest analysis for POSCO STEELEON

Click here to see how much of its profit POSCO STEELEON 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see POSCO STEELEON has grown its earnings rapidly, up 67% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. POSCO STEELEON has delivered 26% dividend growth per year on average over the past five years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Is POSCO STEELEON an attractive dividend stock, or better left on the shelf? It's great that POSCO STEELEON is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about POSCO STEELEON, and we would prioritise taking a closer look at it.

In light of that, while POSCO STEELEON has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for POSCO STEELEON and you should be aware of them before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.