Abu Dhabi National Oil Company for Distribution PJSC (ADX:ADNOCDIST) Has Affirmed Its Dividend Of AED0.1029

Abu Dhabi National Oil Company for Distribution PJSC (ADX:ADNOCDIST) has announced that it will pay a dividend of AED0.1029 per share on the 22nd of October. The dividend yield will be 5.4% based on this payment which is still above the industry average.

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Abu Dhabi National Oil Company for Distribution PJSC's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last dividend, Abu Dhabi National Oil Company for Distribution PJSC is earning enough to cover the payment, but then it makes up 129% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

EPS is set to grow by 15.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 91%, which is on the higher side, but certainly still feasible.

Check out our latest analysis for Abu Dhabi National Oil Company for Distribution PJSC

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

Looking back, Abu Dhabi National Oil Company for Distribution PJSC's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 7 years was AED0.0588 in 2018, and the most recent fiscal year payment was AED0.206. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

We Could See Abu Dhabi National Oil Company for Distribution PJSC's Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Abu Dhabi National Oil Company for Distribution PJSC has grown earnings per share at 6.3% per year over the past five years. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Abu Dhabi National Oil Company for Distribution PJSC that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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