There's A Lot To Like About Qatar Gas Transport Company Limited (Nakilat) (QPSC)'s (DSM:QGTS) Upcoming ر.ق0.12 Dividend

By
Simply Wall St
Published
February 24, 2022
DSM:QGTS
Source: Shutterstock

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Qatar Gas Transport Company Limited (Nakilat) (QPSC) (DSM:QGTS) is about to trade ex-dividend in the next 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Qatar Gas Transport Company Limited (Nakilat) (QPSC) investors that purchase the stock on or after the 1st of March will not receive the dividend, which will be paid on the 1st of January.

The company's upcoming dividend is ر.ق0.12 a share, following on from the last 12 months, when the company distributed a total of ر.ق0.12 per share to shareholders. Last year's total dividend payments show that Qatar Gas Transport Company Limited (Nakilat) (QPSC) has a trailing yield of 3.4% on the current share price of QAR3.581. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Qatar Gas Transport Company Limited (Nakilat) (QPSC)

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Qatar Gas Transport Company Limited (Nakilat) (QPSC)'s payout ratio is modest, at just 49% of profit. A useful secondary check can be to evaluate whether Qatar Gas Transport Company Limited (Nakilat) (QPSC) generated enough free cash flow to afford its dividend. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

historic-dividend
DSM:QGTS Historic Dividend February 24th 2022

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Qatar Gas Transport Company Limited (Nakilat) (QPSC) earnings per share are up 7.2% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Qatar Gas Transport Company Limited (Nakilat) (QPSC) dividends are largely the same as they were seven years ago.

Final Takeaway

From a dividend perspective, should investors buy or avoid Qatar Gas Transport Company Limited (Nakilat) (QPSC)? Earnings per share growth has been growing somewhat, and Qatar Gas Transport Company Limited (Nakilat) (QPSC) is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Qatar Gas Transport Company Limited (Nakilat) (QPSC) is being conservative with its dividend payouts and could still perform reasonably over the long run. Qatar Gas Transport Company Limited (Nakilat) (QPSC) looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Qatar Gas Transport Company Limited (Nakilat) (QPSC) for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for Qatar Gas Transport Company Limited (Nakilat) (QPSC) that we strongly recommend you have a look at before investing in the company.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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