DongKook Pharmaceutical's (KOSDAQ:086450) Dividend Will Be ₩200.00

The board of DongKook Pharmaceutical Co., Ltd. (KOSDAQ:086450) has announced that it will pay a dividend on the 18th of April, with investors receiving ₩200.00 per share. This means the dividend yield will be fairly typical at 1.1%.

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DongKook Pharmaceutical's Future Dividend Projections Appear Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, prior to this announcement, DongKook Pharmaceutical's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 60.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 10%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for DongKook Pharmaceutical

DongKook Pharmaceutical Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of ₩104.00 in 2019 to the most recent total annual payment of ₩200.00. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. However, DongKook Pharmaceutical's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Our Thoughts On DongKook Pharmaceutical's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about DongKook Pharmaceutical's payments, as there could be some issues with sustaining them into the future. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on DongKook Pharmaceutical management tenure, salary, and performance. Is DongKook Pharmaceutical not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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