Caregen Co., Ltd. (KOSDAQ:214370) Goes Ex-Dividend Soon

It looks like Caregen Co., Ltd. (KOSDAQ:214370) is about to go ex-dividend in the next three days. Ex-dividend means that investors that purchase the stock on or after the 29th of December will not receive this dividend, which will be paid on the 7th of April.

Caregen's upcoming dividend is ₩2,800 a share, following on from the last 12 months, when the company distributed a total of ₩2,800 per share to shareholders. Calculating the last year's worth of payments shows that Caregen has a trailing yield of 3.9% on the current share price of ₩71500. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Caregen

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Caregen paid out 98% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. 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. Over the last year it paid out 72% of its free cash flow as dividends, within the usual range for most companies.

It's good to see that while Caregen's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit Caregen paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Caregen's earnings per share have risen 16% per annum over the last five years.

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

Final Takeaway

Should investors buy Caregen for the upcoming dividend? Growing earnings per share and a normal cashflow payout ratio is an ok combination, but we're concerned that the company is paying out such a high percentage of its income as dividends. Overall, it's hard to get excited about Caregen from a dividend perspective.

However if you're still interested in Caregen as a potential investment, you should definitely consider some of the risks involved with Caregen. For example, we've found 1 warning sign for Caregen that we recommend you consider before investing in the business.

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.

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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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