Here's What We Like About DMSLtd's (KOSDAQ:068790) Upcoming Dividend

It looks like DMS Co.,Ltd. (KOSDAQ:068790) is about to go ex-dividend in the next 3 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 13th of April.

DMSLtd's next dividend payment will be ₩75.00 per share, and in the last 12 months, the company paid a total of ₩75.00 per share. Last year's total dividend payments show that DMSLtd has a trailing yield of 0.9% on the current share price of ₩8320. 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.

View our latest analysis for DMSLtd

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. DMSLtd has a low and conservative payout ratio of just 10% of its income after tax. 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 5.0% 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 DMSLtd 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. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see DMSLtd earnings per share are up 8.3% per annum over the last five years. Earnings per share have been increasing steadily and management is reinvesting almost all of the profits back into the business. If profits are reinvested effectively, this could be a bullish combination for future earnings and dividends.

Unfortunately DMSLtd has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

Is DMSLtd worth buying for its dividend? Earnings per share have been growing moderately, and DMSLtd is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but DMSLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. DMSLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while DMSLtd has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 4 warning signs for DMSLtd you should know about.

If you're in the market for dividend stocks, we recommend checking our list of top 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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