Alef Education Holding (ADX:ALEFEDT) Has Announced A Dividend Of AED0.0482

The board of Alef Education Holding plc (ADX:ALEFEDT) has announced that it will pay a dividend on the 28th of August, with investors receiving AED0.0482 per share. Based on this payment, the dividend yield on the company's stock will be 8.9%, which is an attractive boost to shareholder returns.

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Alef Education Holding's Future Dividends May Potentially Be At Risk

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last dividend, Alef Education Holding is earning enough to cover the payment, but then it makes up 153% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Looking forward, earnings per share is forecast to fall by 13.9% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 173%, which is definitely a bit high to be sustainable going forward.

See our latest analysis for Alef Education Holding

Alef Education Holding Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Alef Education Holding will be very happy to have seen its EPS grow by 66% in just the last 12 months. It's nice to see earnings per share rising, but one year is too short a period to get excited about. Were this trend to continue, we'd be interested. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Alef Education Holding could prove to be a strong dividend payer. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

Our Thoughts On Alef Education Holding's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Alef Education Holding's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Alef Education Holding that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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