Should You Buy Al Khaleej Takaful Insurance Company Q.P.S.C. (DSM:AKHI) For Its Upcoming Dividend?

Al Khaleej Takaful Insurance Company Q.P.S.C. (DSM:AKHI) is about to trade ex-dividend in the next 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase Al Khaleej Takaful Insurance Company Q.P.S.C's shares on or after the 18th of March, you won't be eligible to receive the dividend, when it is paid on the 1st of January.

The company's next dividend payment will be ر.ق0.15 per share, on the back of last year when the company paid a total of ر.ق0.15 to shareholders. Based on the last year's worth of payments, Al Khaleej Takaful Insurance Company Q.P.S.C has a trailing yield of 6.0% on the current stock price of ر.ق2.509. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

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

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. Al Khaleej Takaful Insurance Company Q.P.S.C paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies.

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

Click here to see how much of its profit Al Khaleej Takaful Insurance Company Q.P.S.C paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Al Khaleej Takaful Insurance Company Q.P.S.C has grown its earnings rapidly, up 21% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Al Khaleej Takaful Insurance Company Q.P.S.C has increased its dividend at approximately 1.4% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Al Khaleej Takaful Insurance Company Q.P.S.C is keeping back more of its profits to grow the business.

To Sum It Up

Is Al Khaleej Takaful Insurance Company Q.P.S.C worth buying for its dividend? Earnings per share are growing nicely, and Al Khaleej Takaful Insurance Company Q.P.S.C is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Al Khaleej Takaful Insurance Company Q.P.S.C more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Al Khaleej Takaful Insurance Company Q.P.S.C has 1 warning sign we think you should be aware of.

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.