Emirates Integrated Telecommunications Company PJSC (DFM:DU) Goes Ex-Dividend Soon
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 Emirates Integrated Telecommunications Company PJSC (DFM:DU) is about to go ex-dividend in just 3 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase Emirates Integrated Telecommunications Company PJSC's shares before the 31st of July to receive the dividend, which will be paid on the .
The company's next dividend payment will be د.إ0.26 per share, and in the last 12 months, the company paid a total of د.إ0.64 per share. Based on the last year's worth of payments, Emirates Integrated Telecommunications Company PJSC has a trailing yield of 5.3% on the current stock price of د.إ12.02. 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.
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. Emirates Integrated Telecommunications Company PJSC paid out 97% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. A useful secondary check can be to evaluate whether Emirates Integrated Telecommunications Company PJSC generated enough free cash flow to afford its dividend. The company paid out 95% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.
Cash is slightly more important than profit from a dividend perspective, but given Emirates Integrated Telecommunications Company PJSC's payouts were not well covered by either earnings or cash flow, we would be concerned about the sustainability of this dividend.
See our latest analysis for Emirates Integrated Telecommunications Company PJSC
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Emirates Integrated Telecommunications Company PJSC's earnings per share have been growing at 16% a year for the past five years. It's not encouraging to see Emirates Integrated Telecommunications Company PJSC paying out basically all of its earnings and cashflow to shareholders. We're glad that earnings are growing rapidly, but we're wary of the company stretching itself financially.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Emirates Integrated Telecommunications Company PJSC has lifted its dividend by approximately 6.8% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
From a dividend perspective, should investors buy or avoid Emirates Integrated Telecommunications Company PJSC? While it's nice to see earnings per share growing, we're curious about how Emirates Integrated Telecommunications Company PJSC intends to continue growing, or maintain the dividend in a downturn given that it's paying out such a high percentage of its earnings and cashflow. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.
With that in mind though, if the poor dividend characteristics of Emirates Integrated Telecommunications Company PJSC don't faze you, it's worth being mindful of the risks involved with this business. Our analysis shows 1 warning sign for Emirates Integrated Telecommunications Company PJSC and you should be aware of this before buying any shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.