Four Days Left To Buy Sam-A Pharm. Co., Ltd (KOSDAQ:009300) Before The Ex-Dividend Date

It looks like Sam-A Pharm. Co., Ltd (KOSDAQ:009300) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 29th of December in order to be eligible for this dividend, which will be paid on the 31st of March.

Sam-A Pharm's next dividend payment will be ₩300 per share. Last year, in total, the company distributed ₩300 to shareholders. Looking at the last 12 months of distributions, Sam-A Pharm has a trailing yield of approximately 1.8% on its current stock price of ₩16750. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Sam-A Pharm has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Sam-A Pharm

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Sam-A Pharm is paying out an acceptable 54% of its profit, a common payout level among most companies. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 18% 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 how much of its profit Sam-A Pharm paid out over the last 12 months.

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. As a result, it's definitely disappointing to see that earnings per share have declined 17% over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Sam-A Pharm has delivered 7.2% dividend growth per year on average over the past 10 years. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

To Sum It Up

Is Sam-A Pharm worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. 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.

With that being said, if dividends aren't your biggest concern with Sam-A Pharm, you should know about the other risks facing this business. Every company has risks, and we've spotted 5 warning signs for Sam-A Pharm (of which 1 is potentially serious!) 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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