Here's Why We're Wary Of Buying Mirae Asset Venture Investment's (KOSDAQ:100790) For Its Upcoming Dividend

Mirae Asset Venture Investment Co., Ltd. (KOSDAQ:100790) is about to trade ex-dividend in the next 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. In other words, investors can purchase Mirae Asset Venture Investment's shares before the 29th of December in order to be eligible for the dividend, which will be paid on the 21st of April.

The company's upcoming dividend is ₩85.00 a share, following on from the last 12 months, when the company distributed a total of ₩85.00 per share to shareholders. Last year's total dividend payments show that Mirae Asset Venture Investment has a trailing yield of 0.6% on the current share price of ₩14250.00. 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! As a result, readers should always check whether Mirae Asset Venture Investment has been able to grow its dividends, or if the dividend might be cut.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Mirae Asset Venture Investment distributed an unsustainably high 113% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

View our latest analysis for Mirae Asset Venture Investment

Click here to see how much of its profit Mirae Asset Venture Investment paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Mirae Asset Venture Investment's 21% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Mirae Asset Venture Investment has seen its dividend decline 5.2% per annum on average over the past six years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

Is Mirae Asset Venture Investment an attractive dividend stock, or better left on the shelf? Earnings per share are in decline and Mirae Asset Venture Investment is paying out what we feel is an uncomfortably high percentage of its profit as dividends. It's not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Mirae Asset Venture Investment. Be aware that Mirae Asset Venture Investment is showing 4 warning signs in our investment analysis, and 2 of those are potentially serious...

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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.