Quality Reliability Technology's (KOSDAQ:405100) Dividend Will Be ₩480.00

The board of Quality Reliability Technology Inc. (KOSDAQ:405100) has announced that it will pay a dividend on the 20th of April, with investors receiving ₩480.00 per share. This means the annual payment is 3.2% of the current stock price, which is above the average for the industry.

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Quality Reliability Technology's Future Dividends May Potentially Be At Risk

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, the dividend made up 210% of earnings, and the company was generating negative free cash flows. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

If the company can't turn things around, EPS could fall by 17.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 249%, which could put the dividend in jeopardy if the company's earnings don't improve.

View our latest analysis for Quality Reliability Technology

Quality Reliability Technology Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The payments haven't really changed that much since 3 years ago. Quality Reliability Technology hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Quality Reliability Technology's EPS has fallen by approximately 17% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Quality Reliability Technology's Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Quality Reliability Technology make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 4 warning signs for Quality Reliability Technology (of which 2 make us uncomfortable!) you should know about. 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.