Abdullah Saad Mohammed Abo Moati for Bookstores Company (TADAWUL:4191) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Abdullah Saad Mohammed Abo Moati for Bookstores Company (TADAWUL:4191) stock is about to trade ex-dividend in three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. In other words, investors can purchase Abdullah Saad Mohammed Abo Moati for Bookstores' shares before the 2nd of September in order to be eligible for the dividend, which will be paid on the 15th of September.
The company's next dividend payment will be ر.س0.50 per share, on the back of last year when the company paid a total of ر.س1.00 to shareholders. Last year's total dividend payments show that Abdullah Saad Mohammed Abo Moati for Bookstores has a trailing yield of 2.4% on the current share price of ر.س42.10. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Its dividend payout ratio is 89% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 44% of the free cash flow it generated, which is a comfortable payout ratio.
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.
See our latest analysis for Abdullah Saad Mohammed Abo Moati for Bookstores
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Abdullah Saad Mohammed Abo Moati for Bookstores's earnings have been skyrocketing, up 34% per annum for the past five years. Earnings per share are growing at a rapid rate, yet the company is paying out more than three-quarters of its earnings.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Abdullah Saad Mohammed Abo Moati for Bookstores has delivered 12% dividend growth per year on average over the past six years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Should investors buy Abdullah Saad Mohammed Abo Moati for Bookstores for the upcoming dividend? We like Abdullah Saad Mohammed Abo Moati for Bookstores's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.
Want to learn more about Abdullah Saad Mohammed Abo Moati for Bookstores? Here's a visualisation of its historical rate of revenue and earnings growth.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.