There's A Lot To Like About Hyundai Glovis' (KRX:086280) Upcoming ₩3,500 Dividend

Hyundai Glovis Co., Ltd. (KRX:086280) is about to trade ex-dividend in the next three days. If you purchase the stock on or after the 29th of December, you won't be eligible to receive this dividend, when it is paid on the 17th of April.

Hyundai Glovis's next dividend payment will be ₩3,500 per share, and in the last 12 months, the company paid a total of ₩3,500 per share. Looking at the last 12 months of distributions, Hyundai Glovis has a trailing yield of approximately 1.9% on its current stock price of ₩182000. If you buy this business for its dividend, you should have an idea of whether Hyundai Glovis's dividend is reliable and sustainable. So we need to investigate whether Hyundai Glovis can afford its dividend, and if the dividend could grow.

View our latest analysis for Hyundai Glovis

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Hyundai Glovis paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 11% of its free cash flow as dividends last year, which is conservatively low.

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 the company's payout ratio, plus analyst estimates of its future dividends.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Hyundai Glovis, with earnings per share up 4.5% on average over the last five years. Hyundai Glovis is retaining more than three-quarters of its earnings and has a history of generating some growth in earnings. We think this is a reasonable combination.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Hyundai Glovis has delivered 19% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is Hyundai Glovis worth buying for its dividend? Earnings per share growth has been growing somewhat, and Hyundai Glovis is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Hyundai Glovis is halfway there. There's a lot to like about Hyundai Glovis, and we would prioritise taking a closer look at it.

Ever wonder what the future holds for Hyundai Glovis? See what the 22 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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