Emirates Telecommunications Group Company PJSC (ADX:EAND) Pays A د.إ0.415 Dividend In Just Two Days

Readers hoping to buy Emirates Telecommunications Group Company PJSC (ADX:EAND) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Emirates Telecommunications Group Company PJSC's shares before the 9th of August in order to receive the dividend, which the company will pay on the 1st of January.

The company's next dividend payment will be د.إ0.415 per share, on the back of last year when the company paid a total of د.إ0.83 to shareholders. Looking at the last 12 months of distributions, Emirates Telecommunications Group Company PJSC has a trailing yield of approximately 5.1% on its current stock price of د.إ16.36. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Emirates Telecommunications Group Company PJSC can afford its dividend, and if the dividend could grow.

See our latest analysis for Emirates Telecommunications Group Company PJSC

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 more than half (64%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 86% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Emirates Telecommunications Group Company PJSC earnings per share are up 4.5% per annum over the last five years. A payout ratio of 64% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Emirates Telecommunications Group Company PJSC has lifted its dividend by approximately 2.7% a year on average. 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.

To Sum It Up

Is Emirates Telecommunications Group Company PJSC an attractive dividend stock, or better left on the shelf? 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. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Emirates Telecommunications Group Company PJSC's dividend merits.

If you're not too concerned about Emirates Telecommunications Group Company PJSC's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 2 warning signs for Emirates Telecommunications Group Company PJSC that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com