Here's Why We're Wary Of Buying Seoul Guarantee Insurance's (KRX:031210) For Its Upcoming Dividend
Seoul Guarantee Insurance Company (KRX:031210) stock is about to trade ex-dividend in 4 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Seoul Guarantee Insurance's shares before the 25th of August to receive the dividend, which will be paid on the 10th of September.
The company's next dividend payment will be ₩430.00 per share, on the back of last year when the company paid a total of ₩2,865 to shareholders. Based on the last year's worth of payments, Seoul Guarantee Insurance stock has a trailing yield of around 6.7% on the current share price of ₩42950.00. If you buy this business for its dividend, you should have an idea of whether Seoul Guarantee Insurance's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Seoul Guarantee Insurance paid out 65% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
See our latest analysis for Seoul Guarantee Insurance
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Seoul Guarantee Insurance'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.
Unfortunately Seoul Guarantee Insurance has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
From a dividend perspective, should investors buy or avoid Seoul Guarantee Insurance? Seoul Guarantee Insurance's earnings per share have been essentially flat, and the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Seoul Guarantee Insurance. For example, we've found 1 warning sign for Seoul Guarantee Insurance that we recommend you consider before investing in the business.
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.