Does SUN KWANG CO., Ltd. (KOSDAQ: 003100) a great dividend? How can we inform? Firms that pay dividends and develop income will be very rewarding in the long term. For those who hope to reside off your dividends, you will need to be extra strict along with your investments than the typical bettor. Common readers know we like to use the identical strategy to each dividend inventory, and we hope you discover our evaluation helpful.

A return of 1.2% is nothing distinctive, however traders in all probability assume the lengthy historical past of funds means that SUN KWANGLtd has some resistance. The corporate additionally repurchased shares equal to round 2.2% of market capitalization this 12 months. When shopping for shares for his or her dividends, it is best to all the time undergo the checks under to see if the dividend appears sustainable.

Discover this interactive graph for our newest evaluation on SUN KWANGLtd!

Payout ratios

Dividends are typically paid out of the corporate’s income. If a enterprise pays greater than it earns, then the dividend can turn out to be unsustainable – hardly a perfect scenario. Evaluating dividend funds to an organization’s after-tax internet revenue is a straightforward strategy to take a look at real-life whether or not a dividend is sustainable. SUN KWANGLtd paid 24% of its revenue within the type of dividends, over the twelve month interval. With a low payout ratio, it appears just like the dividend is absolutely lined by earnings.

Along with evaluating dividends to earnings, we have to examine whether or not the corporate has generated sufficient money to pay its dividend. SUN KWANGLtd paid 5.5% of its free money stream as dividends final 12 months, which is conservative and suggests the dividend is sustainable. It’s optimistic to see that SUN KWANGLtd’s dividend is roofed by each earnings and money stream, as that is often an indication that the dividend is sustainable, and a decrease payout ratio often suggests a bigger margin. safety earlier than the dividend is lowered.

We replace our information on SUN KWANGLtd each 24 hours, so you’ll be able to all the time get our newest evaluation of its monetary well being, right here.

Dividend volatility

One of many main dangers of habit to dividend revenue is the chance for a corporation to wrestle financially and scale back its dividend. Not solely does your revenue go down, however the worth of your funding additionally goes down – disagreeable. For the needs of this text, we’re solely wanting on the final decade of dividend funds from SUN KWANGLtd. Its dividend funds have declined at the least as soon as previously 10 years. Over the previous 10 years, the primary annual cost was 250 ₩ in 2011, in comparison with 350 ₩ final 12 months. Dividends per share have elevated by roughly 3.4% per 12 months throughout this era. Dividends have not grown 3.4% per 12 months, but it surely’s a helpful strategy to common the historic development fee.

It is good to see some dividend development, however the dividend has been lowered at the least as soon as, and the scale of the discount would eradicate a lot of the development, anyway. We’re not very enthusiastic about it.

Potential for dividend development

Because the dividend has been lowered previously, we have to examine if income are rising and if this might result in greater dividends sooner or later. Robust earnings per share (EPS) development might encourage our curiosity within the firm regardless of fluctuating dividends, which is why it’s nice to see that SUN KWANGLtd has elevated its earnings per share by 24% per 12 months over the previous 5 years. final years. Earnings per share have grown quickly and the corporate retains nearly all of its income. We predict that is excellent from an funding standpoint, if the corporate is ready to successfully reinvest these income.

Conclusion

Dividend traders ought to all the time need to know if a) an organization’s dividends are inexpensive, b) if there’s a historical past of constant funds, and c) if the dividend is able to rising. First, we like the truth that the corporate’s dividend funds seem like nicely hedged, although the capital retained should even be reinvested effectively. Then the revenue development has been good, however sadly the dividend has been lowered at the least as soon as previously. SUN KWANGLtd performs very nicely on this scan, albeit barely under our rigorous requirements. On the proper valuation, this might be a strong dividend prospect.

Corporations with a steady dividend coverage will seemingly profit from higher investor curiosity than these with a extra inconsistent strategy. Nevertheless, there are different issues for traders to contemplate when analyzing the efficiency of shares. Simply for instance we got here throughout 2 warning indicators for SUN KWANGLtd you’ve got to pay attention to this, and certainly one of them can’t be ignored.

For those who’re a dividend investor, you may additionally need to try our curated checklist of dividend-paying shares which have a yield above 3%.

Promoted
For those who resolve to commerce SUN KWANGLtd, use the most affordable platform * rated # 1 general by Barron’s, Interactive brokers. Commerce shares, choices, futures, currencies, bonds and funds in 135 markets, all from one built-in account.

This Merely Wall St article is basic in nature. It doesn’t represent a suggestion to purchase or promote any inventory, and doesn’t have in mind your targets or your monetary scenario. We purpose to convey you long-term, focused evaluation primarily based on basic information. Observe that our evaluation could not have in mind the newest bulletins from value delicate corporations or qualitative data. Merely Wall St has no place in any of the shares talked about.
^*Interactive Brokers Ranked Least Costly Dealer By StockBrokers.com Annual On-line Assessment 2020

Do you’ve got any feedback on this text? Involved concerning the content material? Get in contact with us straight. You may also ship an electronic mail to the editorial workforce (at) simplywallst.com.