Emirates Integrated Telecommunications Company PJSC (DFM:DU) Is Increasing Its Dividend To AED0.34

Emirates Integrated Telecommunications Company PJSC (DFM:DU) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of January to AED0.34. This will take the annual payment to 6.6% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for Emirates Integrated Telecommunications Company PJSC

Emirates Integrated Telecommunications Company PJSC's Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, the company's dividend was higher than its profits, and made up 90% 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.

EPS is set to grow by 11.8% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 88% which is a bit high but can definitely be sustainable.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was AED0.31, compared to the most recent full-year payment of AED0.54. This implies that the company grew its distributions at a yearly rate of about 5.7% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Emirates Integrated Telecommunications Company PJSC has seen EPS rising for the last five years, at 7.5% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Emirates Integrated Telecommunications Company PJSC's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments are bit high to be considered sustainable, and the track record isn't the best. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Emirates Integrated Telecommunications Company PJSC that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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