Income Investors Should Know That Saeron Automotive Corporation (KRX:075180) Goes Ex-Dividend Soon

Saeron Automotive Corporation (KRX:075180) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. In other words, investors can purchase Saeron Automotive's shares before the 29th of December in order to be eligible for the dividend, which will be paid on the 13th of April.

The company's next dividend payment will be ₩140.00 per share, on the back of last year when the company paid a total of ₩140 to shareholders. Last year's total dividend payments show that Saeron Automotive has a trailing yield of 4.1% on the current share price of ₩3385.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Saeron Automotive paid out 70% of its earnings to investors last year, a normal payout level for most businesses. 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. Fortunately, it paid out only 47% of its free cash flow in the past year.

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.

Check out our latest analysis for Saeron Automotive

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Saeron Automotive's earnings per share have fallen at approximately 16% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Saeron Automotive's dividend payments per share have declined at 1.1% per year on average over the past six years, which is uninspiring.

Final Takeaway

Is Saeron Automotive worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. All things considered, we are not particularly enthused about Saeron Automotive from a dividend perspective.

However if you're still interested in Saeron Automotive as a potential investment, you should definitely consider some of the risks involved with Saeron Automotive. In terms of investment risks, we've identified 2 warning signs with Saeron Automotive and understanding them should be part of your investment process.

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.