National Bank of Ras Al-Khaimah (P.S.C.) (ADX:RAKBANK) Is Increasing Its Dividend To AED0.50

The National Bank of Ras Al-Khaimah (P.S.C.) (ADX:RAKBANK) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of January to AED0.50. This will take the annual payment to 7.4% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for National Bank of Ras Al-Khaimah (P.S.C.)

National Bank of Ras Al-Khaimah (P.S.C.)'s Payment Expected To Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

National Bank of Ras Al-Khaimah (P.S.C.) has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 49%, which means that National Bank of Ras Al-Khaimah (P.S.C.) would be able to pay its last dividend without pressure on the balance sheet.

Over the next 3 years, EPS is forecast to fall by 7.8%. Despite that, analysts estimate the future payout ratio could be 48% over the same time period, which is in a pretty comfortable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was AED0.417, compared to the most recent full-year payment of AED0.50. This means that it has been growing its distributions at 1.8% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. National Bank of Ras Al-Khaimah (P.S.C.) has impressed us by growing EPS at 14% 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.

National Bank of Ras Al-Khaimah (P.S.C.) Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that National Bank of Ras Al-Khaimah (P.S.C.) is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, National Bank of Ras Al-Khaimah (P.S.C.) has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Is National Bank of Ras Al-Khaimah (P.S.C.) not quite the opportunity you were looking for? Why not check out 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.