Does KT Corporation (NYSE:KT) Have A Place In Your Portfolio?

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. KT Corporation (NYSE:KT) has returned to shareholders over the past 10 years, an average dividend yield of 3.00% annually. Let’s dig deeper into whether KT should have a place in your portfolio. See our latest analysis for KT

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it paying an annual yield above 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share amount increased over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

NYSE:KT Historical Dividend Yield May 28th 18

How well does KT fit our criteria?

The current trailing twelve-month payout ratio for the stock is 53.52%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect KT’s payout to fall to 37.97% of its earnings, which leads to a dividend yield of 4.15%. However, EPS should increase to ₩2867.21, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from KT fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Relative to peers, KT generates a yield of 3.68%, which is on the low-side for Telecom stocks.

Next Steps:

If KT is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three important aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for KT’s future growth? Take a look at our free research report of analyst consensus for KT’s outlook.

2. Valuation: What is KT worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether KT is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.