Emirates Telecommunications Group Company PJSC (ADX:EAND) Is Increasing Its Dividend To AED0.415

The board of Emirates Telecommunications Group Company PJSC (ADX:EAND) has announced that it will be paying its dividend of AED0.415 on the 1st of January, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 4.9%, which is fairly typical for the industry.

See our latest analysis for Emirates Telecommunications Group Company PJSC

Emirates Telecommunications Group Company PJSC's Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. The last dividend was quite comfortably covered by Emirates Telecommunications Group Company PJSC's earnings, but it was a bit tighter on the cash flow front. The business is earning enough to make the dividend feasible, but the cash payout ratio of 82% indicates it is more focused on returning cash to shareholders than growing the business.

Looking forward, earnings per share is forecast to rise by 13.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 57%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of AED0.636 in 2014 to the most recent total annual payment of AED0.83. This works out to be a compound annual growth rate (CAGR) of approximately 2.7% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Emirates Telecommunications Group Company PJSC May Find It Hard To Grow The Dividend

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 4.3% per year. Growth of 4.3% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Our Thoughts On Emirates Telecommunications Group Company PJSC's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Emirates Telecommunications Group Company PJSC's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Emirates Telecommunications Group Company PJSC has been making. We don't think Emirates Telecommunications Group Company PJSC is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Emirates Telecommunications Group Company PJSC that investors should take into consideration. 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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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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