There's A Lot To Like About Pyung Hwa Holdings' (KRX:010770) Upcoming ₩150.00 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Pyung Hwa Holdings Co., Ltd. (KRX:010770) is about to go ex-dividend in just three 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Pyung Hwa Holdings' shares before the 29th of December in order to be eligible for the dividend, which will be paid on the 6th of April.

The company's next dividend payment will be ₩150.00 per share, on the back of last year when the company paid a total of ₩150 to shareholders. Based on the last year's worth of payments, Pyung Hwa Holdings stock has a trailing yield of around 3.9% on the current share price of ₩3895.00. If you buy this business for its dividend, you should have an idea of whether Pyung Hwa Holdings's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Pyung Hwa Holdings has a low and conservative payout ratio of just 11% of its income after tax. 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 11% of its cash flow last year.

It's positive to see that Pyung Hwa 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 Pyung Hwa Holdings

Click here to see how much of its profit Pyung Hwa 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Pyung Hwa Holdings's earnings have been skyrocketing, up 28% per annum for the past five years. Pyung Hwa Holdings earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Pyung Hwa Holdings's dividend payments are broadly unchanged compared to where they were six years ago.

The Bottom Line

From a dividend perspective, should investors buy or avoid Pyung Hwa Holdings? We love that Pyung Hwa Holdings is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Pyung Hwa Holdings looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Pyung Hwa Holdings for the dividends alone, you should always be mindful of the risks involved. For example, Pyung Hwa Holdings has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.