Dongwha Pharm.Co.Ltd (KRX:000020) Is Due To Pay A Dividend Of ₩180.00

The board of Dongwha Pharm.Co.,Ltd (KRX:000020) has announced that it will pay a dividend on the 24th of April, with investors receiving ₩180.00 per share. The dividend yield will be 2.9% based on this payment which is still above the industry average.

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Estimates Indicate Dongwha Pharm.Co.Ltd's Could Struggle to Maintain Dividend Payments In The Future

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Dongwha Pharm.Co.Ltd was paying out a fairly large proportion of earnings, and it wasn't generating positive free cash flows either. Generally, we think that this would be a risky long term practice.

EPS is set to fall by 17.9% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 96%, which could put the dividend in jeopardy if the company's earnings don't improve.

See our latest analysis for Dongwha Pharm.Co.Ltd

Dongwha Pharm.Co.Ltd Is Still Building Its Track Record

Dongwha Pharm.Co.Ltd's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the annual payment back then was ₩120.00, compared to the most recent full-year payment of ₩180.00. This implies that the company grew its distributions at a yearly rate of about 7.0% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Dongwha Pharm.Co.Ltd to be a consistent dividend paying stock.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Over the past five years, it looks as though Dongwha Pharm.Co.Ltd's EPS has declined at around 18% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Dongwha Pharm.Co.Ltd's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 4 warning signs for Dongwha Pharm.Co.Ltd you should be aware of, and 2 of them are a bit concerning. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.