ADNOC Drilling Company P.J.S.C's (ADX:ADNOCDRILL) Dividend Will Be Increased To $0.0905

ADNOC Drilling Company P.J.S.C. (ADX:ADNOCDRILL) will increase its dividend from last year's comparable payment on the 1st of January to $0.0905. This makes the dividend yield 3.5%, which is above the industry average.

Check out our latest analysis for ADNOC Drilling Company P.J.S.C

ADNOC Drilling Company P.J.S.C's Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite comfortably covered by ADNOC Drilling Company P.J.S.C's earnings, but it was a bit tighter on the cash flow front. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

The next 12 months is set to see EPS grow by 20.1%. If the dividend continues on its recent course, the payout ratio in 12 months could be 185%, which is a bit high and could start applying pressure to the balance sheet.

ADNOC Drilling Company P.J.S.C Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2022, the dividend has gone from $0.0406 total annually to $0.0493. This implies that the company grew its distributions at a yearly rate of about 6.6% over that duration. ADNOC Drilling Company P.J.S.C has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. ADNOC Drilling Company P.J.S.C has impressed us by growing EPS at 17% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments ADNOC Drilling Company P.J.S.C has been making. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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 picked out 1 warning sign for ADNOC Drilling Company P.J.S.C 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.