Al Khaleej Takaful Insurance Company Q.P.S.C (DSM:AKHI) Is Paying Out A Larger Dividend Than Last Year

Al Khaleej Takaful Insurance Company Q.P.S.C.'s (DSM:AKHI) dividend will be increasing from last year's payment of the same period to QAR0.15 on 1st of January. This will take the dividend yield to an attractive 6.0%, providing a nice boost to shareholder returns.

See our latest analysis for Al Khaleej Takaful Insurance Company Q.P.S.C

Al Khaleej Takaful Insurance Company Q.P.S.C's Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Al Khaleej Takaful Insurance Company Q.P.S.C was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 21.3% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was QAR0.13 in 2015, and the most recent fiscal year payment was QAR0.15. This implies that the company grew its distributions at a yearly rate of about 1.4% over that duration. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Al Khaleej Takaful Insurance Company Q.P.S.C has seen EPS rising for the last five years, at 21% per annum. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Al Khaleej Takaful Insurance Company Q.P.S.C could prove to be a strong dividend payer.

We Really Like Al Khaleej Takaful Insurance Company Q.P.S.C's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Al Khaleej Takaful Insurance Company Q.P.S.C that investors should take into consideration. Is Al Khaleej Takaful Insurance Company Q.P.S.C not quite the opportunity you were looking for? Why not check out 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.