Fujairah Building Industries P.J.S.C (ADX:FBI) Is Due To Pay A Dividend Of AED0.30

Fujairah Building Industries P.J.S.C. (ADX:FBI) has announced that it will pay a dividend of AED0.30 per share on the 1st of January. This makes the dividend yield 8.6%, which will augment investor returns quite nicely.

View our latest analysis for Fujairah Building Industries P.J.S.C

Estimates Indicate Fujairah Building Industries P.J.S.C's Could Struggle to Maintain Dividend Payments In The Future

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, the company's dividend was higher than its profits, and made up 76% of cash flows. While the cash payout ratio isn't necessarily a cause for concern, the company is probably focusing more on returning cash to shareholders than growing the business.

EPS is set to fall by 13.3% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 245%, which could put the dividend in jeopardy if the company's earnings don't improve.

Fujairah Building Industries P.J.S.C Is Still Building Its Track Record

Fujairah Building Industries P.J.S.C's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2017, the annual payment back then was AED0.05, compared to the most recent full-year payment of AED0.30. This works out to be a compound annual growth rate (CAGR) of approximately 25% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Fujairah Building Industries P.J.S.C's EPS has fallen by approximately 13% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Fujairah Building Industries P.J.S.C's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Fujairah Building Industries P.J.S.C's payments, as there could be some issues with sustaining them into the future. The track record isn't great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Fujairah Building Industries P.J.S.C (of which 1 is a bit concerning!) you should know about. Is Fujairah Building Industries P.J.S.C not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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