Stock Analysis

Abu Dhabi National Energy Company PJSC's (ADX:TAQA) Dividend Will Be AED0.006

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The board of Abu Dhabi National Energy Company PJSC (ADX:TAQA) has announced that it will pay a dividend on the 29th of August, with investors receiving AED0.006 per share. The dividend yield is 2.1% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Abu Dhabi National Energy Company PJSC

Abu Dhabi National Energy Company PJSC's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Abu Dhabi National Energy Company PJSC's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 5.7% over the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 78% in the next 12 months, which is on the higher end of the range we would say is sustainable.

ADX:TAQA Historic Dividend August 13th 2022

Abu Dhabi National Energy Company PJSC Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2020, the annual payment back then was AED0.025, compared to the most recent full-year payment of AED0.0275. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

We Could See Abu Dhabi National Energy Company PJSC's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Abu Dhabi National Energy Company PJSC has grown earnings per share at 8.7% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Abu Dhabi National Energy Company PJSC Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Abu Dhabi National Energy Company PJSC might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Abu Dhabi National Energy Company PJSC you should be aware of, and 1 of them is significant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.