Emirates Telecommunications Group Company PJSC (ADX:ETISALAT) Stock Goes Ex-Dividend In Just Three Days

By
Simply Wall St
Published
April 10, 2022
ADX:ETISALAT
Source: Shutterstock

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Emirates Telecommunications Group Company PJSC (ADX:ETISALAT) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Therefore, if you purchase Emirates Telecommunications Group Company PJSC's shares on or after the 14th of April, you won't be eligible to receive the dividend, when it is paid on the 25th of April.

The company's next dividend payment will be د.إ0.40 per share, and in the last 12 months, the company paid a total of د.إ0.80 per share. Looking at the last 12 months of distributions, Emirates Telecommunications Group Company PJSC has a trailing yield of approximately 2.1% on its current stock price of AED37.78. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. 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 is paying out an acceptable 75% of its profit, a common payout level among most companies. 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. It paid out 83% 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.

historic-dividend
ADX:ETISALAT Historic Dividend April 10th 2022

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Emirates Telecommunications Group Company PJSC's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share. A payout ratio of 75% 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Emirates Telecommunications Group Company PJSC has delivered 3.9% dividend growth per year on average over the past 10 years.

Final Takeaway

Has Emirates Telecommunications Group Company PJSC got what it takes to maintain its dividend payments? Emirates Telecommunications Group Company PJSC has struggled to grow its earnings per share, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear unsustainable. In summary, it's hard to get excited about Emirates Telecommunications Group Company PJSC from a dividend perspective.

Wondering what the future holds for Emirates Telecommunications Group Company PJSC? See what the seven analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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