Only Three Days Left To Cash In On Abu Dhabi National Takaful Company PSC's (ADX:TKFL) Dividend

Abu Dhabi National Takaful Company PSC (ADX:TKFL) stock is about to trade ex-dividend in 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Meaning, you will need to purchase Abu Dhabi National Takaful Company PSC's shares before the 25th of April to receive the dividend, which will be paid on the 15th of May.

The company's upcoming dividend is د.إ0.315 a share, following on from the last 12 months, when the company distributed a total of د.إ0.26 per share to shareholders. Calculating the last year's worth of payments shows that Abu Dhabi National Takaful Company PSC has a trailing yield of 5.1% on the current share price of د.إ5.00. If you buy this business for its dividend, you should have an idea of whether Abu Dhabi National Takaful Company PSC's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Abu Dhabi National Takaful Company PSC

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Abu Dhabi National Takaful Company PSC distributed an unsustainably high 146% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

Click here to see how much of its profit Abu Dhabi National Takaful Company PSC paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Abu Dhabi National Takaful Company PSC earnings per share are up 8.6% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Abu Dhabi National Takaful Company PSC has delivered 5.4% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Should investors buy Abu Dhabi National Takaful Company PSC for the upcoming dividend? Abu Dhabi National Takaful Company PSC has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that in mind though, if the poor dividend characteristics of Abu Dhabi National Takaful Company PSC don't faze you, it's worth being mindful of the risks involved with this business. For example, we've found 3 warning signs for Abu Dhabi National Takaful Company PSC (1 is potentially serious!) that deserve your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.