Why You Might Be Interested In Secuve Co., Ltd. (KOSDAQ:131090) For Its Upcoming Dividend

Readers hoping to buy Secuve Co., Ltd. (KOSDAQ:131090) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 29th of December to receive the dividend, which will be paid on the 20th of April.

The upcoming dividend for Secuve is ₩15.00 per share, increased from last year's total dividends per share of ₩9.46. If you buy this business for its dividend, you should have an idea of whether Secuve's dividend is reliable and sustainable. So we need to investigate whether Secuve can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Secuve

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. Secuve has a low and conservative payout ratio of just 6.3% 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 6.8% of its free cash flow last year.

It's positive to see that Secuve'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 Secuve paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 Secuve's earnings have been skyrocketing, up 30% per annum for the past five years. Secuve earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Secuve's dividend payments are broadly unchanged compared to where they were two years ago.

To Sum It Up

From a dividend perspective, should investors buy or avoid Secuve? We love that Secuve is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Secuve looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 1 warning sign for Secuve and you should be aware of this before buying any shares.

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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