Is It Worth Considering National Central Cooling Company PJSC (DFM:TABREED) For Its Upcoming Dividend?
Readers hoping to buy National Central Cooling Company PJSC (DFM:TABREED) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. This means that investors who purchase National Central Cooling Company PJSC's shares on or after the 19th of August will not receive the dividend, which will be paid on the 7th of October.
The company's next dividend payment will be د.إ0.05 per share, and in the last 12 months, the company paid a total of د.إ0.13 per share. Last year's total dividend payments show that National Central Cooling Company PJSC has a trailing yield of 5.4% on the current share price of د.إ2.41. If you buy this business for its dividend, you should have an idea of whether National Central Cooling Company PJSC's dividend is reliable and sustainable. So we need to investigate whether National Central Cooling Company PJSC can afford its dividend, and if the dividend could grow.
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. National Central Cooling Company PJSC paid out a comfortable 48% of its profit last year. A useful secondary check can be to evaluate whether National Central Cooling Company PJSC generated enough free cash flow to afford its dividend. Fortunately, it paid out only 40% of its free cash flow in the past year.
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.
View our latest analysis for National Central Cooling 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 shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. National Central Cooling Company PJSC's earnings per share have fallen at approximately 6.0% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. National Central Cooling Company PJSC has delivered an average of 8.5% per year annual increase in its dividend, based on the past 10 years of dividend payments.
The Bottom Line
Is National Central Cooling Company PJSC an attractive dividend stock, or better left on the shelf? National Central Cooling Company PJSC has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.
In light of that, while National Central Cooling Company PJSC has an appealing dividend, it's worth knowing the risks involved with this stock. Be aware that National Central Cooling Company PJSC is showing 3 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.