Is It Worth Considering Sung Woo Co.,Ltd (KOSDAQ:458650) For Its Upcoming Dividend?

It looks like Sung Woo Co.,Ltd (KOSDAQ:458650) is about to go ex-dividend in the next 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Sung WooLtd investors that purchase the stock on or after the 29th of December will not receive the dividend, which will be paid on the 27th of April.

The company's next dividend payment will be ₩150.00 per share. Last year, in total, the company distributed ₩150 to shareholders. Looking at the last 12 months of distributions, Sung WooLtd has a trailing yield of approximately 1.5% on its current stock price of ₩10010.00. If you buy this business for its dividend, you should have an idea of whether Sung WooLtd's dividend is reliable and sustainable. So we need to investigate whether Sung WooLtd can afford its dividend, and if the dividend could grow.

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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. Sung WooLtd paid out a comfortable 49% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 21% of its free cash flow last year.

It's positive to see that Sung WooLtd'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.

Check out our latest analysis for Sung WooLtd

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Sung WooLtd's earnings per share have plummeted approximately 46% a year over the previous three years.

We'd also point out that Sung WooLtd issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

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

Final Takeaway

Has Sung WooLtd got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about Sung WooLtd from a dividend perspective.

In light of that, while Sung WooLtd has an appealing dividend, it's worth knowing the risks involved with this stock. To that end, you should learn about the 2 warning signs we've spotted with Sung WooLtd (including 1 which is potentially serious).

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.