DB Financial Investment Co., Ltd. (KRX: 016610) a smart choice for income investors?
DB Financial Investment Co., Ltd. (KRX: 016610) Is It A Good Dividend Stock? How can we tell? Companies that pay dividends and grow profits can be very rewarding in the long run. On the other hand, investors have been known to buy a stock because of its performance and then lose money if the company’s dividend falls short of expectations.
In this case, DB Financial Investment probably looks attractive to investors, given its 4.5% dividend yield and a payment history of over ten years. It would not be surprising to find that many investors buy it for dividends. When buying stocks for their dividends, you should always perform the checks below to see if the dividend looks sustainable.
Explore this interactive chart for our latest analysis on DB Financial Investment!
Dividends are generally paid out of company profits. If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. So we need to get a feel for the sustainability of a company’s dividend relative to its after-tax net profit. Last year, DB Financial Investment paid out 13% of its profits in the form of dividends. With a low payout ratio, it looks like the dividend is fully covered by earnings.
Remember, you can always get an overview of DB Financial Investment’s latest financial situation by viewing our visualization of its financial health.
Before buying a stock for income, we want to see if dividends have been stable in the past and if the company has a habit of maintaining its dividend. DB Financial Investment has been paying dividends for a long time, but for the purposes of this analysis we are only looking at the last 10 years of payments. During this period, the dividend has been stable, which could mean that the company could have a relatively constant profit power. Its most recent annual dividend was 300 per share, a fixed amount compared to its first payment 10 years ago.
Potential for dividend growth
If the dividend payouts have been relatively reliable, it would also be desirable for the earnings per share (EPS) to increase, as this is essential to maintain the purchasing power of the dividend over the long term. Strong earnings per share (EPS) growth could encourage our interest in the company despite fluctuating dividends, which is why it is great to see DB Financial Investment increase its earnings per share by 52% per year over the past five years. . Earnings per share have grown rapidly and the company retains the majority of its earnings. We believe this is ideal from an investment point of view, if the company is able to effectively reinvest these profits.
When we look at a dividend stock, we need to determine whether the dividend will increase, whether the company is able to sustain it under a wide range of economic circumstances, and whether the dividend payment is sustainable. We are happy to see that DB Financial Investment has a low payout ratio as it suggests that profits are being reinvested in the business. We like that it has seen a solid improvement in earnings per share and relatively consistent dividend payouts. DB Financial Investment meets all of our criteria and we believe this is an attractive dividend idea that merits further study.
It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. For example, we have identified 3 warning signs for DB Financial Investment (1 is a bit unpleasant!) That you need to know before investing.
Looking for more high yield dividend ideas? Try our curated list of dividend-paying stocks with a yield above 3%.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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