National Central Cooling Company PJSC (DFM:TABREED) Will Pay A Dividend Of د.إ0.06

National Central Cooling Company PJSC's (DFM:TABREED) investors are due to receive a payment of د.إ0.06 per share on 1st of January. Based on this payment, the dividend yield on the company's stock will be 2.4%, which is an attractive boost to shareholder returns.

See our latest analysis for National Central Cooling Company PJSC

National Central Cooling Company PJSC's Earnings Easily Cover the Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, National Central Cooling Company PJSC was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 7.3% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 37%, which we are pretty comfortable with and we think is feasible on an earnings basis.

National Central Cooling Company PJSC's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from د.إ0.049 in 2013 to the most recent annual payment of د.إ0.06. This works out to be a compound annual growth rate (CAGR) of approximately 2.3% a year over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Has Growth Potential

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. National Central Cooling Company PJSC has impressed us by growing EPS at 6.7% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for National Central Cooling Company PJSC's prospects of growing its dividend payments in the future.

Our Thoughts On National Central Cooling Company PJSC's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for National Central Cooling Company PJSC (1 is a bit unpleasant!) that you should be aware of before investing. Is National Central Cooling Company PJSC not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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