Should Income Investors Look At KPX Holdings Co.,Ltd. (KRX:092230) Before Its Ex-Dividend?

Readers hoping to buy KPX Holdings Co.,Ltd. (KRX:092230) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 29th of December to receive the dividend, which will be paid on the 9th of April.

KPX HoldingsLtd's next dividend payment will be ₩2,000 per share. Last year, in total, the company distributed ₩2,600 to shareholders. Calculating the last year's worth of payments shows that KPX HoldingsLtd has a trailing yield of 4.1% on the current share price of ₩63400. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for KPX HoldingsLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. KPX HoldingsLtd paid out just 19% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Over the last year it paid out 72% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that KPX HoldingsLtd'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 KPX HoldingsLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at KPX HoldingsLtd, with earnings per share up 2.3% on average over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Given that KPX HoldingsLtd has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Has KPX HoldingsLtd got what it takes to maintain its dividend payments? Earnings per share have been growing at a steady rate, and KPX HoldingsLtd paid out less than half its profits and more than half its free cash flow as dividends over the last year. In summary, it's hard to get excited about KPX HoldingsLtd from a dividend perspective.

In light of that, while KPX HoldingsLtd has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 3 warning signs for KPX HoldingsLtd 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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