Emirates Central Cooling Systems Corporation (DFM:EMPOWER) Pays A د.إ0.04375 Dividend In Just Three Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Emirates Central Cooling Systems Corporation (DFM:EMPOWER) is about to trade ex-dividend in the next three 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. 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. Meaning, you will need to purchase Emirates Central Cooling Systems' shares before the 30th of September to receive the dividend, which will be paid on the 15th of October.
The company's upcoming dividend is د.إ0.04375 a share, following on from the last 12 months, when the company distributed a total of د.إ0.087 per share to shareholders. Looking at the last 12 months of distributions, Emirates Central Cooling Systems has a trailing yield of approximately 5.5% on its current stock price of د.إ1.60. 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 usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Emirates Central Cooling Systems paid out a comfortable 41% of its profit last year. A useful secondary check can be to evaluate whether Emirates Central Cooling Systems generated enough free cash flow to afford its dividend. It paid out more than half (60%) of its free cash flow in the past year, which is within an average range for most companies.
It's positive to see that Emirates Central Cooling Systems's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
See our latest analysis for Emirates Central Cooling Systems
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Emirates Central Cooling Systems's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 35% a year over the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Emirates Central Cooling Systems has delivered an average of 20% per year annual increase in its dividend, based on the past four years of dividend payments.
Final Takeaway
From a dividend perspective, should investors buy or avoid Emirates Central Cooling Systems? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. To summarise, Emirates Central Cooling Systems looks okay on this analysis, although it doesn't appear a stand-out opportunity.
If you want to look further into Emirates Central Cooling Systems, it's worth knowing the risks this business faces. Our analysis shows 1 warning sign for Emirates Central Cooling Systems and you should be aware of it before buying any shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.