There's A Lot To Like About STraffic Co's (KOSDAQ:234300) Upcoming ₩40.00 Dividend

STraffic Co,. Ltd (KOSDAQ:234300) is about to trade ex-dividend in the next 3 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase STraffic Co's shares before the 27th of December in order to receive the dividend, which the company will pay on the 15th of April.

The company's upcoming dividend is ₩40.00 a share, following on from the last 12 months, when the company distributed a total of ₩40.00 per share to shareholders. Last year's total dividend payments show that STraffic Co has a trailing yield of 1.1% on the current share price of ₩3765.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether STraffic Co can afford its dividend, and if the dividend could grow.

Check out our latest analysis for STraffic Co

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. STraffic Co paid out just 7.0% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether STraffic Co generated enough free cash flow to afford its dividend. STraffic Co paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Click here to see how much of its profit STraffic Co 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see STraffic Co has grown its earnings rapidly, up 64% a year for the past five years.

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

The Bottom Line

Should investors buy STraffic Co for the upcoming dividend? We like that STraffic Co has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. In summary, while it has some positive characteristics, we're not inclined to race out and buy STraffic Co today.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For instance, we've identified 2 warning signs for STraffic Co (1 is a bit unpleasant) you should be aware of.

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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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.