Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that SBI FinTech Solutions Co., Ltd. (KOSDAQ:950110) is about to go ex-dividend in just 4 days. You can purchase shares before the 30th of March in order to receive the dividend, which the company will pay on the 26th of June.
SBI FinTech Solutions’s next dividend payment will be ₩185 per share. Last year, in total, the company distributed ₩185 to shareholders. Based on the last year’s worth of payments, SBI FinTech Solutions stock has a trailing yield of around 2.9% on the current share price of ₩6350. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for SBI FinTech Solutions
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. Fortunately SBI FinTech Solutions’s payout ratio is modest, at just 50% of profit. 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. It paid out 14% of its free cash flow as dividends last year, which is conservatively low.
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.
Click here to see how much of its profit SBI FinTech Solutions paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It’s encouraging to see SBI FinTech Solutions has grown its earnings rapidly, up 40% a year for the past five years. SBI FinTech Solutions is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
This is SBI FinTech Solutions’s first year of paying a dividend, which is exciting for shareholders – but it does mean there’s no dividend history to examine.
Has SBI FinTech Solutions got what it takes to maintain its dividend payments? We love that SBI FinTech Solutions is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. There’s a lot to like about SBI FinTech Solutions, and we would prioritise taking a closer look at it.
In light of that, while SBI FinTech Solutions has an appealing dividend, it’s worth knowing the risks involved with this stock. In terms of investment risks, we’ve identified 3 warning signs with SBI FinTech Solutions and understanding them should be part of your investment process.
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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