Dongwha Pharm.Co.,Ltd (KRX:000020) Pays A ₩120 Dividend In Just Four Days

Readers hoping to buy Dongwha Pharm.Co.,Ltd (KRX:000020) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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.

Dongwha Pharm.Co.Ltd's upcoming dividend is ₩120 a share, following on from the last 12 months, when the company distributed a total of ₩120 per share to shareholders. Looking at the last 12 months of distributions, Dongwha Pharm.Co.Ltd has a trailing yield of approximately 0.6% on its current stock price of ₩20000. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Dongwha Pharm.Co.Ltd

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Dongwha Pharm.Co.Ltd paid out just 12% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Luckily it paid out just 12% of its free 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 Dongwha Pharm.Co.Ltd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Dongwha Pharm.Co.Ltd's 9.4% per annum decline in earnings in the past three years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Dongwha Pharm.Co.Ltd has delivered an average of 1.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Is Dongwha Pharm.Co.Ltd worth buying for its dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy Dongwha Pharm.Co.Ltd today.

On that note, you'll want to research what risks Dongwha Pharm.Co.Ltd is facing. Every company has risks, and we've spotted 3 warning signs for Dongwha Pharm.Co.Ltd (of which 1 is concerning!) 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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