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 Arabian United Float Glass Company (TADAWUL:9611) is about to go ex-dividend in just day or two. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Arabian United Float Glass' shares before the 8th of November in order to be eligible for the dividend, which will be paid on the 16th of November.
The company's next dividend payment will be ر.س1.00 per share. Last year, in total, the company distributed ر.س1.50 to shareholders. Calculating the last year's worth of payments shows that Arabian United Float Glass has a trailing yield of 6.2% on the current share price of ر.س24.18. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Arabian United Float Glass has been able to grow its dividends, or if the dividend might be cut.
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. Arabian United Float Glass paid out 51% of its earnings to investors last year, a normal payout level for most businesses. 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. Thankfully its dividend payments took up just 46% of the free cash flow it generated, which is a comfortable payout ratio.
It's positive to see that Arabian United Float Glass'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 Arabian United Float Glass
Click here to see how much of its profit Arabian United Float Glass paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Arabian United Float Glass's earnings per share have fallen at approximately 13% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Given that Arabian United Float Glass has only been paying a dividend for a year, there's not much of a past history to draw insight from.
The Bottom Line
Is Arabian United Float Glass an attractive dividend stock, or better left on the shelf? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. To summarise, Arabian United Float Glass looks okay on this analysis, although it doesn't appear a stand-out opportunity.
If you want to look further into Arabian United Float Glass, it's worth knowing the risks this business faces. For example, we've found 1 warning sign for Arabian United Float Glass that we recommend you consider before investing in the business.
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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