Is It Smart To Buy JW Lifescience Corporation (KRX:234080) Before It Goes Ex-Dividend?

JW Lifescience Corporation (KRX:234080) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 24th of April.

JW Lifescience's next dividend payment will be ₩500 per share, on the back of last year when the company paid a total of ₩500 to shareholders. Last year's total dividend payments show that JW Lifescience has a trailing yield of 2.4% on the current share price of ₩20900. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for JW Lifescience

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. Fortunately JW Lifescience's payout ratio is modest, at just 28% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (61%) of its free cash flow in the past year, which is within an average range for most companies.

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 JW Lifescience paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see JW Lifescience's earnings have been skyrocketing, up 24% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. JW Lifescience's dividend payments are effectively flat on where they were three years ago.

To Sum It Up

Should investors buy JW Lifescience for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, JW Lifescience paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about JW Lifescience, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks JW Lifescience is facing. To help with this, we've discovered 1 warning sign for JW Lifescience that you should be aware of before investing in their shares.

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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