Emirates Telecommunications Group Company PJSC (ADX:EAND) Goes Ex-Dividend Soon

It looks like Emirates Telecommunications Group Company PJSC (ADX:EAND) is about to go ex-dividend in the next 3 days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Emirates Telecommunications Group Company PJSC's shares before the 24th of April in order to be eligible for the dividend, which will be paid on the 9th of May.

The company's next dividend payment will be د.إ0.415 per share, and in the last 12 months, the company paid a total of د.إ0.83 per share. Calculating the last year's worth of payments shows that Emirates Telecommunications Group Company PJSC has a trailing yield of 4.8% on the current share price of د.إ17.34. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Emirates Telecommunications Group Company PJSC paid out 67% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Dividends consumed 66% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Emirates Telecommunications Group Company PJSC's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for Emirates Telecommunications Group Company PJSC

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Emirates Telecommunications Group Company PJSC, with earnings per share up 4.3% on average over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Emirates Telecommunications Group Company PJSC has delivered 2.7% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

From a dividend perspective, should investors buy or avoid Emirates Telecommunications Group Company PJSC? Earnings per share have been growing modestly and Emirates Telecommunications Group Company PJSC paid out a bit over half of its earnings and free cash flow last year. All things considered, we are not particularly enthused about Emirates Telecommunications Group Company PJSC from a dividend perspective.

However if you're still interested in Emirates Telecommunications Group Company PJSC as a potential investment, you should definitely consider some of the risks involved with Emirates Telecommunications Group Company PJSC. To help with this, we've discovered 2 warning signs for Emirates Telecommunications Group Company PJSC that you should be aware of before investing in their shares.

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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.