Is It Worth Considering Medy-Tox Inc. (KOSDAQ:086900) For Its Upcoming Dividend?
Readers hoping to buy Medy-Tox Inc. (KOSDAQ:086900) 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase Medy-Tox's shares on or after the 28th of October, you won't be eligible to receive the dividend, when it is paid on the 13th of November.
The company's next dividend payment will be ₩1200.00 per share, and in the last 12 months, the company paid a total of ₩1,200 per share. Last year's total dividend payments show that Medy-Tox has a trailing yield of 1.8% on the current share price of ₩67400.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Medy-Tox paid out 54% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Medy-Tox generated enough free cash flow to afford its dividend. The good news is it paid out just 23% of its free cash flow in the last year.
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.
See our latest analysis for Medy-Tox
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Medy-Tox's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 42% a year over the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Medy-Tox's dividend payments per share have declined at 3.3% per year on average over the past nine years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.
Final Takeaway
From a dividend perspective, should investors buy or avoid Medy-Tox? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. Overall, it's hard to get excited about Medy-Tox from a dividend perspective.
If you want to look further into Medy-Tox, it's worth knowing the risks this business faces. In terms of investment risks, we've identified 2 warning signs with Medy-Tox and understanding them should be part of your investment process.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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