Is It Smart To Buy sindoh Co.,Ltd. (KRX:029530) Before It Goes Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see sindoh Co.,Ltd. (KRX:029530) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase sindohLtd's shares on or after the 27th of December will not receive the dividend, which will be paid on the 18th of April.

The company's next dividend payment will be ₩1500.00 per share. Last year, in total, the company distributed ₩1,500 to shareholders. Based on the last year's worth of payments, sindohLtd stock has a trailing yield of around 4.0% on the current share price of ₩37300.00. If you buy this business for its dividend, you should have an idea of whether sindohLtd's dividend is reliable and sustainable. As a result, readers should always check whether sindohLtd has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for sindohLtd

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. sindohLtd paid out a comfortable 27% of its profit last year. A useful secondary check can be to evaluate whether sindohLtd generated enough free cash flow to afford its dividend. The good news is it paid out just 20% of its free cash flow in the last year.

It's positive to see that sindohLtd'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 sindohLtd 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see sindohLtd earnings per share are up 9.4% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. sindohLtd has seen its dividend decline 1.3% per annum on average over the past five years, which is not great to see.

Final Takeaway

From a dividend perspective, should investors buy or avoid sindohLtd? Earnings per share have been growing moderately, and sindohLtd is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but sindohLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. sindohLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while sindohLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 1 warning sign for sindohLtd that you should be aware of before investing in their shares.

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.