JW Pharmaceutical's (KRX:001060) Upcoming Dividend Will Be Larger Than Last Year's

The board of JW Pharmaceutical Corporation (KRX:001060) has announced that it will be paying its dividend of ₩450.00 on the 28th of April, an increased payment from last year's comparable dividend. This will take the annual payment to 1.6% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for JW Pharmaceutical

JW Pharmaceutical's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, JW Pharmaceutical's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 136.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 7.6%, which is in the range that makes us comfortable with the sustainability of the dividend.

JW Pharmaceutical Doesn't Have A Long Payment History

It is great to see that JW Pharmaceutical has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2016, the dividend has gone from ₩209.31 total annually to ₩392.16. This means that it has been growing its distributions at 8.2% per annum over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. JW Pharmaceutical has impressed us by growing EPS at 66% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

JW Pharmaceutical Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. As an example, we've identified 1 warning sign for JW Pharmaceutical that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.