Abu Dhabi National Oil Company for Distribution PJSC (ADX:ADNOCDIST) Will Pay A Dividend Of د.إ0.10

Abu Dhabi National Oil Company for Distribution PJSC's (ADX:ADNOCDIST) investors are due to receive a payment of د.إ0.10 per share on 28th of October. The dividend yield will be 4.8% based on this payment which is still above the industry average.

View our latest analysis for Abu Dhabi National Oil Company for Distribution PJSC

Abu Dhabi National Oil Company for Distribution PJSC Doesn't Earn Enough To Cover Its Payments

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Abu Dhabi National Oil Company for Distribution PJSC's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Over the next year, EPS is forecast to fall by 9.3%. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 122%, which could put the dividend under pressure if earnings don't start to improve.

Abu Dhabi National Oil Company for Distribution PJSC's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2018, the dividend has gone from د.إ0.059 to د.إ0.21. This means that it has been growing its distributions at 52% per annum over that time. Abu Dhabi National Oil Company for Distribution PJSC has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Abu Dhabi National Oil Company for Distribution PJSC's Dividend Might Lack Growth

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see Abu Dhabi National Oil Company for Distribution PJSC has been growing its earnings per share at 16% a year over the past five years. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.

Our Thoughts On Abu Dhabi National Oil Company for Distribution PJSC's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Abu Dhabi National Oil Company for Distribution PJSC's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Abu Dhabi National Oil Company for Distribution PJSC is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Abu Dhabi National Oil Company for Distribution PJSC (of which 1 makes us a bit uncomfortable!) you should know about. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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.

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