HD Hyundai Electric (KRX:267260) Could Be A Buy For Its Upcoming Dividend

Readers hoping to buy HD Hyundai Electric Co., Ltd. (KRX:267260) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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. This means that investors who purchase HD Hyundai Electric's shares on or after the 10th of November will not receive the dividend, which will be paid on the 26th of November.

The company's next dividend payment will be ₩1300.00 per share, on the back of last year when the company paid a total of ₩5,200 to shareholders. Calculating the last year's worth of payments shows that HD Hyundai Electric has a trailing yield of 1.3% on the current share price of ₩401500.00. If you buy this business for its dividend, you should have an idea of whether HD Hyundai Electric's dividend is reliable and sustainable. So we need to investigate whether HD Hyundai Electric 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. HD Hyundai Electric is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether HD Hyundai Electric generated enough free cash flow to afford its dividend. It distributed 34% of its free cash flow as dividends, a comfortable payout level for most companies.

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.

View our latest analysis for HD Hyundai Electric

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see HD Hyundai Electric has grown its earnings rapidly, up 51% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, four years ago, HD Hyundai Electric has lifted its dividend by approximately 80% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Has HD Hyundai Electric got what it takes to maintain its dividend payments? It's great that HD Hyundai Electric is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about HD Hyundai Electric, and we would prioritise taking a closer look at it.

Curious what other investors think of HD Hyundai Electric? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

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