Agthia Group PJSC (ADX:AGTHIA) Has Announced A Dividend Of AED0.0825

Agthia Group PJSC (ADX:AGTHIA) has announced that it will pay a dividend of AED0.0825 per share on the 1st of January. This means the annual payment is 3.3% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Agthia Group PJSC

Agthia Group 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. Prior to this announcement, Agthia Group PJSC's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 47.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

Agthia Group PJSC Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was AED0.05, compared to the most recent full-year payment of AED0.165. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. In the last five years, Agthia Group PJSC's earnings per share has shrunk at approximately 2.3% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

In Summary

Overall, a consistent dividend is a good thing, and we think that Agthia Group PJSC has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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 Agthia Group PJSC that investors should know about before committing capital to this stock. Is Agthia Group PJSC not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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