Stock Analysis

Here's What We Like About OPASNET's (KOSDAQ:173130) Upcoming Dividend

KOSDAQ:A173130
Source: Shutterstock

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see OPASNET co., Ltd. (KOSDAQ:173130) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase OPASNET's shares on or after the 27th of December will not receive the dividend, which will be paid on the 1st of January.

The company's upcoming dividend is ₩100.00 a share, following on from the last 12 months, when the company distributed a total of ₩90.91 per share to shareholders. Looking at the last 12 months of distributions, OPASNET has a trailing yield of approximately 1.2% on its current stock price of ₩7330.00. If you buy this business for its dividend, you should have an idea of whether OPASNET's dividend is reliable and sustainable. As a result, readers should always check whether OPASNET has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for OPASNET

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. OPASNET has a low and conservative payout ratio of just 18% of its income after tax. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 15% of its free cash flow as dividends last year, which is conservatively low.

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

historic-dividend
KOSDAQ:A173130 Historic Dividend December 22nd 2024

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that OPASNET's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio - either of which could increase the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, three years ago, OPASNET has lifted its dividend by approximately 26% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid OPASNET? Earnings per share have been flat over this time, but we're intrigued to see that OPASNET is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and OPASNET is halfway there. Overall we think this is an attractive combination and worthy of further research.

So while OPASNET looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 2 warning signs for OPASNET (of which 1 is a bit concerning!) you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

About KOSDAQ:A173130

OPASNET

Operates as an information technology (IT) solutions company in South Korea.

Excellent balance sheet and slightly overvalued.

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