Here's Why We're Wary Of Buying Qatar Islamic Insurance Group Q.P.S.C's (DSM:QISI) For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Qatar Islamic Insurance Group Q.P.S.C. (DSM:QISI) is about to trade ex-dividend in the next 3 days. If you purchase the stock on or after the 6th of April, you won't be eligible to receive this dividend, when it is paid on the 1st of January.

Qatar Islamic Insurance Group Q.P.S.C's next dividend payment will be ر.ق0.33 per share. Last year, in total, the company distributed ر.ق0.33 to shareholders. Based on the last year's worth of payments, Qatar Islamic Insurance Group Q.P.S.C stock has a trailing yield of around 4.0% on the current share price of QAR8.2. 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.

See our latest analysis for Qatar Islamic Insurance Group 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. Qatar Islamic Insurance Group Q.P.S.C is paying out an acceptable 64% of its profit, a common payout level among 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 Qatar Islamic Insurance Group Q.P.S.C paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Qatar Islamic Insurance Group Q.P.S.C's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Qatar Islamic Insurance Group Q.P.S.C has lifted its dividend by approximately 1.9% a year on average.

To Sum It Up

Has Qatar Islamic Insurance Group Q.P.S.C got what it takes to maintain its dividend payments? Earnings per share have not grown at all, and the company pays out a bit over half its profits to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Although, if you're still interested in Qatar Islamic Insurance Group Q.P.S.C and want to know more, you'll find it very useful to know what risks this stock faces. Our analysis shows 1 warning sign for Qatar Islamic Insurance Group Q.P.S.C and you should be aware of this before buying any shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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