Al Ain Ahlia Insurance Company P.S.C (ADX:ALAIN) Has Affirmed Its Dividend Of AED2.00

Al Ain Ahlia Insurance Company P.S.C. (ADX:ALAIN) has announced that it will pay a dividend of AED2.00 per share on the 1st of January. This means the dividend yield will be fairly typical at 6.7%.

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Al Ain Ahlia Insurance Company P.S.C Might Find It Hard To Continue The Dividend

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Even though Al Ain Ahlia Insurance Company P.S.C isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. This gives us some comfort about the level of the dividend payments.

EPS has fallen by an average of 25.6% in the past, so this could continue over the next year. While this means that the company will be unprofitable, we generally believe cash flows are more important, and the current cash payout ratio is quite healthy, which gives us comfort.

Check out our latest analysis for Al Ain Ahlia Insurance Company P.S.C

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of AED4.00 in 2015 to the most recent total annual payment of AED2.00. This works out to be a decline of approximately 6.7% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Al Ain Ahlia Insurance Company P.S.C's EPS has fallen by approximately 26% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

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. For example, we've identified 2 warning signs for Al Ain Ahlia Insurance Company P.S.C (1 is concerning!) that you should be aware of before investing. Is Al Ain Ahlia Insurance Company 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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