Abu Dhabi Islamic Bank PJSC's (ADX:ADIB) Dividend Will Be Increased To AED0.8343

The board of Abu Dhabi Islamic Bank PJSC (ADX:ADIB) has announced that it will be paying its dividend of AED0.8343 on the 1st of January, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 5.2%.

Check out our latest analysis for Abu Dhabi Islamic Bank PJSC

Abu Dhabi Islamic Bank PJSC's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Abu Dhabi Islamic Bank PJSC has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 56%, which means that Abu Dhabi Islamic Bank PJSC would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 9.5% over the next 3 years. The future payout ratio could be 52% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was AED0.242 in 2015, and the most recent fiscal year payment was AED0.8343. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. Abu Dhabi Islamic Bank PJSC has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Abu Dhabi Islamic Bank PJSC has grown earnings per share at 19% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Abu Dhabi Islamic Bank PJSC's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Abu Dhabi Islamic Bank PJSC that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of 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.