Do These 3 Checks Before Buying JW Holdings Corporation (KRX:096760) For Its Upcoming Dividend

JW Holdings Corporation (KRX:096760) stock is about to trade ex-dividend in 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 24th of April.

JW Holdings's upcoming dividend is ₩87.38 a share, following on from the last 12 months, when the company distributed a total of ₩90.00 per share to shareholders. Last year's total dividend payments show that JW Holdings has a trailing yield of 1.6% on the current share price of ₩5790. If you buy this business for its dividend, you should have an idea of whether JW Holdings's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for JW Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. JW Holdings's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If JW Holdings didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. What's good is that dividends were well covered by free cash flow, with the company paying out 20% of its cash flow last year.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. JW Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, JW Holdings has lifted its dividend by approximately 7.6% a year on average.

Get our latest analysis on JW Holdings's balance sheet health here.

To Sum It Up

Has JW Holdings got what it takes to maintain its dividend payments? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with JW Holdings. For instance, we've identified 2 warning signs for JW Holdings (1 shouldn't be ignored) you should be aware of.

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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