Korea Business News (KOSDAQ:039340) Is Due To Pay A Dividend Of ₩150.00

The board of Korea Business News Co., Ltd. (KOSDAQ:039340) has announced that it will pay a dividend of ₩150.00 per share on the 21st of April. The dividend yield is 2.8% based on this payment, which is a little bit low compared to the other companies in the industry.

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Korea Business News' Projected Earnings Seem Likely To Cover Future Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last dividend, Korea Business News is earning enough to cover the payment, but then it makes up 129% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Unless the company can turn things around, EPS could fall by 11.6% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 54%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Check out our latest analysis for Korea Business News

Korea Business News' Dividend Has Lacked Consistency

Looking back, Korea Business News' dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. The annual payment during the last 6 years was ₩100.00 in 2019, and the most recent fiscal year payment was ₩150.00. This implies that the company grew its distributions at a yearly rate of about 7.0% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Korea Business News' earnings per share has shrunk at 12% a year over the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Korea Business News is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 4 warning signs for Korea Business News (of which 1 can't be ignored!) you should know about. Is Korea Business News not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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