Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Korea Electric Power Corporation (NYSE:KEP) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Does Korea Electric Power tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Korea Electric Power
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has the amount of dividend per share grown over the past?
- Is it able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Korea Electric Power pass our checks?Korea Electric Power has a trailing twelve-month payout ratio of 39.05%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 22.65%, leading to a dividend yield of 3.97%. However, EPS should increase to ₩4703.01, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although KEP’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. In terms of its peers, Korea Electric Power produces a yield of 2.40%, which is on the low-side for Electric Utilities stocks.
Taking into account the dividend metrics, Korea Electric Power ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three pertinent factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for KEP’s future growth? Take a look at our free research report of analyst consensus for KEP’s outlook.
- Valuation: What is KEP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether KEP is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.