Solus Advanced Materials (KRX:336370) Has Announced A Dividend Of ₩10.00

Solus Advanced Materials Co., Ltd. (KRX:336370) will pay a dividend of ₩10.00 on the 27th of April. Including this payment, the dividend yield on the stock will be 0.6%, which is a modest boost for shareholders' returns.

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Solus Advanced Materials' Long-term Dividend Outlook appears Promising

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Even though Solus Advanced Materials is not generating a profit, it is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Looking forward, earnings per share is forecast to rise exponentially over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 0.4%, so there isn't too much pressure on the dividend.

Check out our latest analysis for Solus Advanced Materials

Solus Advanced Materials Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2020, the dividend has gone from ₩5.00 total annually to ₩50.00. This works out to be a compound annual growth rate (CAGR) of approximately 58% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Company Could Face Some Challenges Growing The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Solus Advanced Materials has impressed us by growing EPS at 29% per year over the past five years. While the company is not yet turning a profit, it is growing at a good rate. If profitability can be achieved soon and growth continues apace, this stock could certainly turn into a solid dividend payer.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. Strong earnings growth means Solus Advanced Materials has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Solus Advanced Materials that investors should take into consideration. 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.