Dividend Investors: Don't Be Too Quick To Buy Al Ain Ahlia Insurance Company P.S.C. (ADX:ALAIN) For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Al Ain Ahlia Insurance Company P.S.C. (ADX:ALAIN) is about to trade ex-dividend in the next two days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Al Ain Ahlia Insurance Company P.S.C investors that purchase the stock on or after the 8th of May will not receive the dividend, which will be paid on the 1st of January.

The company's next dividend payment will be د.إ2.00 per share. Last year, in total, the company distributed د.إ2.00 to shareholders. Last year's total dividend payments show that Al Ain Ahlia Insurance Company P.S.C has a trailing yield of 6.7% on the current share price of د.إ30.00. If you buy this business for its dividend, you should have an idea of whether Al Ain Ahlia Insurance Company P.S.C's dividend is reliable and sustainable. So we need to investigate whether Al Ain Ahlia Insurance Company P.S.C can afford its dividend, and if the dividend could grow.

We've discovered 2 warning signs about Al Ain Ahlia Insurance Company P.S.C. View them for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Al Ain Ahlia Insurance Company P.S.C paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

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

Click here to see how much of its profit Al Ain Ahlia Insurance Company P.S.C paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Al Ain Ahlia Insurance Company P.S.C was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Al Ain Ahlia Insurance Company P.S.C's dividend payments per share have declined at 6.7% per year on average over the past 10 years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Remember, you can always get a snapshot of Al Ain Ahlia Insurance Company P.S.C's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

Is Al Ain Ahlia Insurance Company P.S.C an attractive dividend stock, or better left on the shelf? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Although, if you're still interested in Al Ain Ahlia Insurance Company P.S.C and want to know more, you'll find it very useful to know what risks this stock faces. For example, Al Ain Ahlia Insurance Company P.S.C has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.