Is It Smart To Buy Doha Bank Q.P.S.C. (DSM:DHBK) Before It Goes Ex-Dividend?

Readers hoping to buy Doha Bank Q.P.S.C. (DSM:DHBK) 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 the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Doha Bank Q.P.S.C's shares before the 26th of February to receive the dividend, which will be paid on the 1st of January.

The company's next dividend payment will be ر.ق0.10 per share, on the back of last year when the company paid a total of ر.ق0.10 to shareholders. Looking at the last 12 months of distributions, Doha Bank Q.P.S.C has a trailing yield of approximately 4.9% on its current stock price of ر.ق2.052. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Doha Bank Q.P.S.C

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Doha Bank Q.P.S.C paid out a comfortable 36% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Doha Bank Q.P.S.C, with earnings per share up 9.8% on average over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Doha Bank Q.P.S.C has seen its dividend decline 14% per annum on average over the past 10 years, which is not great to see. Doha Bank Q.P.S.C is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

From a dividend perspective, should investors buy or avoid Doha Bank Q.P.S.C? Doha Bank Q.P.S.C has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, Doha Bank Q.P.S.C looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

On that note, you'll want to research what risks Doha Bank Q.P.S.C is facing. Every company has risks, and we've spotted 2 warning signs for Doha Bank Q.P.S.C you should know about.

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.