Be Sure To Check Out Shinhwa Contech Co., Ltd (KOSDAQ:187270) Before It Goes Ex-Dividend

Shinhwa Contech Co., Ltd (KOSDAQ:187270) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Accordingly, Shinhwa Contech investors that purchase the stock on or after the 27th of December will not receive the dividend, which will be paid on the 28th of April.

The company's upcoming dividend is ₩50.00 a share, following on from the last 12 months, when the company distributed a total of ₩50.00 per share to shareholders. Based on the last year's worth of payments, Shinhwa Contech stock has a trailing yield of around 1.7% on the current share price of ₩2980.00. If you buy this business for its dividend, you should have an idea of whether Shinhwa Contech's dividend is reliable and sustainable. As a result, readers should always check whether Shinhwa Contech has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Shinhwa Contech

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. Shinhwa Contech has a low and conservative payout ratio of just 8.4% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 6.6% of its free cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Shinhwa Contech paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Shinhwa Contech has grown its earnings rapidly, up 46% a year for the past five years. Shinhwa Contech 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.'

Unfortunately Shinhwa Contech has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Is Shinhwa Contech an attractive dividend stock, or better left on the shelf? Shinhwa Contech has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Shinhwa Contech is facing. In terms of investment risks, we've identified 1 warning sign with Shinhwa Contech and understanding them should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.