KG Mobilians Co., Ltd (KOSDAQ:046440) Looks Interesting, And It's About To Pay A Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see KG Mobilians Co., Ltd (KOSDAQ:046440) is about to trade ex-dividend in the next 3 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.

The upcoming dividend for KG Mobilians will put a total of ₩220 per share in shareholders' pockets, up from last year's total dividends of ₩200. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for KG Mobilians

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see KG Mobilians paying out a modest 27% of its earnings. A useful secondary check can be to evaluate whether KG Mobilians generated enough free cash flow to afford its dividend. Luckily it paid out just 8.8% of its free cash flow last year.

It's positive to see that KG Mobilians's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit KG Mobilians 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at KG Mobilians, with earnings per share up 9.3% on average over the last five years. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Given that KG Mobilians has only been paying a dividend for a year, there's not much of a past history to draw insight from.

To Sum It Up

Is KG Mobilians worth buying for its dividend? Earnings per share have been growing moderately, and KG Mobilians 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 KG Mobilians is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about KG Mobilians, and we would prioritise taking a closer look at it.

While it's tempting to invest in KG Mobilians for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 2 warning signs with KG Mobilians and understanding them should be part of your investment process.

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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