Be Sure To Check Out Hanjin Heavy Industries & Construction Holdings Co., Ltd. (KRX:003480) Before It Goes Ex-Dividend

Hanjin Heavy Industries & Construction Holdings Co., Ltd. (KRX:003480) stock is about to trade ex-dividend in 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase Hanjin Heavy Industries & Construction Holdings' shares before the 29th of December to receive the dividend, which will be paid on the 17th of April.

The company's upcoming dividend is ₩120.00 a share, following on from the last 12 months, when the company distributed a total of ₩120 per share to shareholders. Based on the last year's worth of payments, Hanjin Heavy Industries & Construction Holdings has a trailing yield of 2.5% on the current stock price of ₩4790.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. Hanjin Heavy Industries & Construction Holdings is paying out just 4.7% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 3.1% of its cash flow last year.

It's positive to see that Hanjin Heavy Industries & Construction Holdings'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.

View our latest analysis for Hanjin Heavy Industries & Construction Holdings

Click here to see how much of its profit Hanjin Heavy Industries & Construction Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Hanjin Heavy Industries & Construction Holdings's earnings per share have been growing at 17% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last four years, Hanjin Heavy Industries & Construction Holdings has lifted its dividend by approximately 4.7% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Hanjin Heavy Industries & Construction Holdings is keeping back more of its profits to grow the business.

The Bottom Line

Should investors buy Hanjin Heavy Industries & Construction Holdings for the upcoming dividend? Hanjin Heavy Industries & Construction Holdings has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. There's a lot to like about Hanjin Heavy Industries & Construction Holdings, and we would prioritise taking a closer look at it.

While it's tempting to invest in Hanjin Heavy Industries & Construction Holdings for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 3 warning signs for Hanjin Heavy Industries & Construction Holdings (1 is a bit concerning!) that you ought to be aware of before buying the shares.

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.