Innowireless Co., Ltd. (KOSDAQ:073490) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Readers hoping to buy Innowireless Co., Ltd. (KOSDAQ:073490) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 14th of April.

Innowireless's next dividend payment will be ₩250 per share, and in the last 12 months, the company paid a total of ₩250 per share. Based on the last year's worth of payments, Innowireless stock has a trailing yield of around 0.4% on the current share price of ₩61100. 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 check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Innowireless

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Innowireless paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 13% of its cash flow last year.

It's positive to see that Innowireless'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 the company's payout ratio, plus analyst estimates of its future dividends.

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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Innowireless has grown its earnings rapidly, up 60% a year for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Innowireless looks like a promising growth company.

Given that Innowireless 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 Innowireless an attractive dividend stock, or better left on the shelf? We love that Innowireless 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. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Innowireless is facing. Every company has risks, and we've spotted 1 warning sign for Innowireless you should know about.

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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