Plantynet Co., Ltd. (KOSDAQ:075130) Looks Interesting, And It's About To Pay A Dividend

Plantynet Co., Ltd. (KOSDAQ:075130) is about to trade ex-dividend in the next three days. You can purchase shares before the 29th of December in order to receive the dividend, which the company will pay on the 17th of April.

Plantynet's upcoming dividend is ₩250 a share, following on from the last 12 months, when the company distributed a total of ₩250 per share to shareholders. Based on the last year's worth of payments, Plantynet stock has a trailing yield of around 4.0% on the current share price of ₩6250. 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! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Plantynet

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. Its dividend payout ratio is 79% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be worried about the risk of a drop in earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (75%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

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 Plantynet paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Plantynet's earnings have been skyrocketing, up 38% per annum for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Plantynet's dividend payments are effectively flat on where they were 10 years ago.

The Bottom Line

Should investors buy Plantynet for the upcoming dividend? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Plantynet's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 79% and 75% respectively. In summary, while it has some positive characteristics, we're not inclined to race out and buy Plantynet today.

In light of that, while Plantynet has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 2 warning signs for Plantynet (1 is concerning) 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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