Is It Worth Considering GOLFZON HOLDINGS Co., Ltd. (KOSDAQ:121440) For Its Upcoming Dividend?

It looks like GOLFZON HOLDINGS Co., Ltd. (KOSDAQ:121440) is about to go ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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, GOLFZON HOLDINGS investors that purchase the stock on or after the 29th of December will not receive the dividend, which will be paid on the 13th of April.

The company's next dividend payment will be ₩250.00 per share, on the back of last year when the company paid a total of ₩250 to shareholders. Last year's total dividend payments show that GOLFZON HOLDINGS has a trailing yield of 4.7% on the current share price of ₩5300.00. 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! So we need to investigate whether GOLFZON HOLDINGS can afford its dividend, and if the dividend could grow.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately GOLFZON HOLDINGS's payout ratio is modest, at just 36% of profit. 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. The company paid out 94% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.

GOLFZON HOLDINGS paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to GOLFZON HOLDINGS's ability to maintain its dividend.

View our latest analysis for GOLFZON HOLDINGS

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. GOLFZON HOLDINGS's earnings per share have fallen at approximately 7.9% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. GOLFZON HOLDINGS has delivered 13% dividend growth per year on average over the past six years.

To Sum It Up

Has GOLFZON HOLDINGS got what it takes to maintain its dividend payments? GOLFZON HOLDINGS's earnings per share have fallen noticeably and, although it paid out less than half its profit as dividends last year, it paid out a disconcertingly high percentage of its cashflow, which is not a great combination. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of GOLFZON HOLDINGS.

With that being said, if you're still considering GOLFZON HOLDINGS as an investment, you'll find it beneficial to know what risks this stock is facing. Every company has risks, and we've spotted 1 warning sign for GOLFZON HOLDINGS you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.