Mouwasat Medical Services Company (TADAWUL:4002) 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 important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Mouwasat Medical Services' shares before the 18th of October in order to receive the dividend, which the company will pay on the 29th of October.
The company's next dividend payment will be ر.س1.00 per share, and in the last 12 months, the company paid a total of ر.س2.25 per share. Based on the last year's worth of payments, Mouwasat Medical Services stock has a trailing yield of around 3.4% on the current share price of ر.س62.00. If you buy this business for its dividend, you should have an idea of whether Mouwasat Medical Services's dividend is reliable and sustainable. So we need to investigate whether Mouwasat Medical Services can afford its dividend, and if the dividend could grow.
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. Mouwasat Medical Services paid out a comfortable 50% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Dividends consumed 66% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's positive to see that Mouwasat Medical Services'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.
Check out our latest analysis for Mouwasat Medical Services
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Mouwasat Medical Services, with earnings per share up 10.0% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Mouwasat Medical Services has lifted its dividend by approximately 16% 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
Is Mouwasat Medical Services worth buying for its dividend? Earnings per share have been growing at a steady rate, and Mouwasat Medical Services paid out less than half its profits and more than half its free cash flow as dividends over the last year. To summarise, Mouwasat Medical Services looks okay on this analysis, although it doesn't appear a stand-out opportunity.
Ever wonder what the future holds for Mouwasat Medical Services? See what the 11 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.