PN Poong Nyun Co., Ltd. (KOSDAQ:024940) Is About To Go Ex-Dividend, And It Pays A 0.6% Yield
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see PN Poong Nyun Co., Ltd. (KOSDAQ:024940) is about to trade ex-dividend in the next 2 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled 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 PN Poong Nyun's shares on or after the 29th of December will not receive the dividend, which will be paid on the 27th of April.
The company's next dividend payment will be ₩30.00 per share, on the back of last year when the company paid a total of ₩30.00 to shareholders. Last year's total dividend payments show that PN Poong Nyun has a trailing yield of 0.6% on the current share price of ₩5390.00. 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.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. PN Poong Nyun has a low and conservative payout ratio of just 9.4% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What's good is that dividends were well covered by free cash flow, with the company paying out 10% of its cash flow last year.
It's positive to see that PN Poong Nyun'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.
See our latest analysis for PN Poong Nyun
Click here to see how much of its profit PN Poong Nyun 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 PN Poong Nyun's 11% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. PN Poong Nyun has delivered an average of 4.7% per year annual increase in its dividend, based on the past four years of dividend payments.
Final Takeaway
Has PN Poong Nyun got what it takes to maintain its dividend payments? PN Poong Nyun has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, it's hard to get excited about PN Poong Nyun from a dividend perspective.
While it's tempting to invest in PN Poong Nyun for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 2 warning signs for PN Poong Nyun you should be aware of.
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.