Why You Might Be Interested In Whan In Pharm Co.,Ltd. (KRX:016580) For Its Upcoming Dividend

It looks like Whan In Pharm Co.,Ltd. (KRX:016580) is about to go ex-dividend in the next four days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 14th of April.

Whan In PharmLtd's upcoming dividend is ₩300 a share, following on from the last 12 months, when the company distributed a total of ₩300 per share to shareholders. Looking at the last 12 months of distributions, Whan In PharmLtd has a trailing yield of approximately 1.8% on its current stock price of ₩16800. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Whan In PharmLtd

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Whan In PharmLtd paid out just 21% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Whan In PharmLtd generated enough free cash flow to afford its dividend. Luckily it paid out just 18% 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 Whan In PharmLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. Earnings per share are basically flat over the past 12 months. The best dividend stocks all grow their earnings per share over the long run, but it is hard to draw strong conclusions from any one year period. Whan In PharmLtd is retaining more than three-quarters of its earnings and has a history of generating some growth in earnings. We think this is a reasonable combination.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Whan In PharmLtd has delivered 1.8% dividend growth per year on average over the past 10 years.

Final Takeaway

Is Whan In PharmLtd an attractive dividend stock, or better left on the shelf? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. Generally we like to see both low payout ratios and strong earnings per share growth, but Whan In PharmLtd is halfway there. There's a lot to like about Whan In PharmLtd, and we would prioritise taking a closer look at it.

While it's tempting to invest in Whan In PharmLtd for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Whan In PharmLtd you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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