Masraf Al Rayan (Q.P.S.C.)'s (DSM:MARK) Dividend Will Be QAR0.10

The board of Masraf Al Rayan (Q.P.S.C.) (DSM:MARK) has announced that it will pay a dividend on the 1st of January, with investors receiving QAR0.10 per share. This means the dividend yield will be fairly typical at 4.3%.

See our latest analysis for Masraf Al Rayan (Q.P.S.C.)

Masraf Al Rayan (Q.P.S.C.)'s Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Masraf Al Rayan (Q.P.S.C.) has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 64%, which means that Masraf Al Rayan (Q.P.S.C.) would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 41.0%. Analysts forecast the future payout ratio could be 74% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of QAR0.15 in 2015 to the most recent total annual payment of QAR0.10. The dividend has shrunk at around 4.0% a year during that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Potential Is Shaky

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Masraf Al Rayan (Q.P.S.C.)'s earnings per share has shrunk at 12% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Masraf Al Rayan (Q.P.S.C.)'s Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Masraf Al Rayan (Q.P.S.C.) that investors should know about before committing capital to this stock. 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.