Salik Company P.J.S.C (DFM:SALIK) Has Announced A Dividend Of AED0.0826

The board of Salik Company P.J.S.C. (DFM:SALIK) has announced that it will pay a dividend on the 1st of January, with investors receiving AED0.0826 per share. This payment means that the dividend yield will be 3.1%, which is around the industry average.

See our latest analysis for Salik Company P.J.S.C

Salik Company P.J.S.C's Future Dividend Projections Appear Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, the dividend made up 82% of cash flows, but a higher proportion of net income. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

The next year is set to see EPS grow by 54.6%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 65% which would be quite comfortable going to take the dividend forward.

Salik Company P.J.S.C Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of AED0.0655 in 2023 to the most recent total annual payment of AED0.155. This works out to be a compound annual growth rate (CAGR) of approximately 54% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. In the last three years, Salik Company P.J.S.C's earnings per share has shrunk at approximately 5.5% per annum. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Salik Company P.J.S.C's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The track record isn't great, and the payments are a bit high to be considered sustainable. We would probably look elsewhere for an income investment.

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. For instance, we've picked out 1 warning sign for Salik Company P.J.S.C that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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