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's (ADX:ADNOCDIST) investors are due to receive a payment of AED0.1029 per share on 1st of January. This means the annual payment is 6.0% of the current stock price, which is above the average for the industry.

Abu Dhabi National Oil Company for Distribution PJSC's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 106% of what it was earning and 93% 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.

Earnings per share is forecast to rise by 21.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 93%, 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

It's comforting to see that Abu Dhabi National Oil Company for Distribution PJSC has been paying a dividend for a number of years now, however it has been cut at least once in that time. 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 implies that the company grew its distributions at a yearly rate of about 20% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 2.4% per year. So the company has struggled to grow its EPS yet it's still paying out 106% of its earnings. This gives limited room for the company to raise the dividend in the future.

Abu Dhabi National Oil Company for Distribution PJSC'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 Abu Dhabi National Oil Company for Distribution PJSC's payments, as there could be some issues with sustaining them into the future. The payments are bit high to be considered sustainable, and the track record isn't the best. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. Just as an example, we've come across 2 warning signs for Abu Dhabi National Oil Company for Distribution PJSC you should be aware of, and 1 of them is potentially serious. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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