GOLFZON Co., Ltd. (KOSDAQ:215000) Pays A ₩2,050 Dividend In Just Three Days

It looks like GOLFZON Co., Ltd. (KOSDAQ:215000) is about to go ex-dividend in the next 3 days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 10th of April.

GOLFZON's upcoming dividend is ₩2,050 a share, following on from the last 12 months, when the company distributed a total of ₩2,050 per share to shareholders. Calculating the last year's worth of payments shows that GOLFZON has a trailing yield of 2.9% on the current share price of ₩69900. 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! So we need to investigate whether GOLFZON can afford its dividend, and if the dividend could grow.

View our latest analysis for GOLFZON

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. GOLFZON paid out a comfortable 48% of its profit last year. 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. Thankfully its dividend payments took up just 40% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that GOLFZON'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by GOLFZON's 9.2% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Unfortunately GOLFZON has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

Has GOLFZON got what it takes to maintain its dividend payments? GOLFZON has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, GOLFZON looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in GOLFZON for the dividends alone, you should always be mindful of the risks involved. For example - GOLFZON has 1 warning sign we think you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

If you decide to trade GOLFZON, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.