CHEMTRONICS.Co.Ltd (KOSDAQ:089010) Is Paying Out A Dividend Of ₩200.00

CHEMTRONICS.Co.,Ltd.'s (KOSDAQ:089010) investors are due to receive a payment of ₩200.00 per share on 18th of April. This means the annual payment will be 0.6% of the current stock price, which is lower than the industry average.

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CHEMTRONICS.Co.Ltd's Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, CHEMTRONICS.Co.Ltd's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 6.5%, which makes us pretty comfortable with the sustainability of the dividend.

View our latest analysis for CHEMTRONICS.Co.Ltd

CHEMTRONICS.Co.Ltd's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2019, the dividend has gone from ₩300.00 total annually to ₩200.00. This works out to be a decline of approximately 6.5% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. However, CHEMTRONICS.Co.Ltd has only grown its earnings per share at 3.9% per annum over the past five years. While EPS growth is quite low, CHEMTRONICS.Co.Ltd has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On CHEMTRONICS.Co.Ltd's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about CHEMTRONICS.Co.Ltd's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for CHEMTRONICS.Co.Ltd (of which 1 makes us a bit uncomfortable!) you should know about. If you are a dividend investor, you might also want to look at our curated 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.