Is It Worth Considering Korea New Network Co., Ltd. (KOSDAQ:058400) For Its Upcoming Dividend?

It looks like Korea New Network Co., Ltd. (KOSDAQ:058400) is about to go ex-dividend in the next 3 days. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Korea New Network's shares on or after the 29th of December, you won't be eligible to receive the dividend, when it is paid on the 20th of April.

The company's next dividend payment will be ₩20.00 per share, and in the last 12 months, the company paid a total of ₩20.00 per share. Calculating the last year's worth of payments shows that Korea New Network has a trailing yield of 2.8% on the current share price of ₩711.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Korea New Network paid out a comfortable 34% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. What's good is that dividends were well covered by free cash flow, with the company paying out 18% of its cash flow last year.

It's positive to see that Korea New Network'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.

Check out our latest analysis for Korea New Network

Click here to see how much of its profit Korea New Network paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Korea New Network's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Korea New Network's dividend payments per share have declined at 2.4% per year on average over the past nine years, which is uninspiring.

The Bottom Line

Is Korea New Network an attractive dividend stock, or better left on the shelf? While it's not great to see that earnings per share are effectively flat over the nine-year period we checked, at least the payout ratios are low and conservative. Overall, it's hard to get excited about Korea New Network from a dividend perspective.

On that note, you'll want to research what risks Korea New Network is facing. For example, we've found 3 warning signs for Korea New Network (1 is concerning!) that deserve your attention before investing in 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.