Huchems Fine Chemical Corporation (KRX:069260) Goes Ex-Dividend Soon

Huchems Fine Chemical Corporation (KRX:069260) stock is about to trade ex-dividend in 3 days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 24th of April.

Huchems Fine Chemical's upcoming dividend is ₩1,000 a share, following on from the last 12 months, when the company distributed a total of ₩1,000 per share to shareholders. Last year's total dividend payments show that Huchems Fine Chemical has a trailing yield of 3.9% on the current share price of ₩25650. If you buy this business for its dividend, you should have an idea of whether Huchems Fine Chemical's dividend is reliable and sustainable. So we need to investigate whether Huchems Fine Chemical can afford its dividend, and if the dividend could grow.

See our latest analysis for Huchems Fine Chemical

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 80% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (63%) of its free cash flow in the past year, which is within an average range 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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. This is why it's a relief to see Huchems Fine Chemical earnings per share are up 4.0% per annum over the last five years. A payout ratio of 80% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Huchems Fine Chemical has lifted its dividend by approximately 0.6% a year on average.

Final Takeaway

Is Huchems Fine Chemical an attractive dividend stock, or better left on the shelf? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

So if you want to do more digging on Huchems Fine Chemical, you'll find it worthwhile knowing the risks that this stock faces. Our analysis shows 1 warning sign for Huchems Fine Chemical and you should be aware of it before buying any 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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