Three Days Left Until Poongsan Corporation (KRX:103140) Trades Ex-Dividend

Poongsan Corporation (KRX:103140) stock is about to trade ex-dividend in three days. Investors can purchase shares before the 29th of December in order to be eligible for this dividend, which will be paid on the 10th of April.

Poongsan's next dividend payment will be ₩400 per share, and in the last 12 months, the company paid a total of ₩400 per share. Looking at the last 12 months of distributions, Poongsan has a trailing yield of approximately 1.5% on its current stock price of ₩27400. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Poongsan has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Poongsan

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. Poongsan paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 9.0% of its cash flow last year.

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?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Poongsan's earnings per share have fallen at approximately 9.0% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

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

To Sum It Up

Is Poongsan worth buying for its dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

While it's tempting to invest in Poongsan for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for Poongsan and you should be aware of these before buying any shares.

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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