Qatar National Cement Company (Q.P.S.C.) (DSM:QNCD) Will Pay A Smaller Dividend Than Last Year

Qatar National Cement Company (Q.P.S.C.)'s (DSM:QNCD) dividend is being reduced from last year's payment covering the same period to QAR0.27 on the 1st of January. This means the annual payment is 6.9% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Qatar National Cement Company (Q.P.S.C.)

Estimates Indicate Qatar National Cement Company (Q.P.S.C.)'s Could Struggle to Maintain Dividend Payments In The Future

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Looking forward, EPS could fall by 1.5% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 108%, which could put the dividend under pressure if earnings don't start to improve.

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 annual payment during the last 10 years was QAR0.301 in 2015, and the most recent fiscal year payment was QAR0.27. The dividend has shrunk at around 1.1% 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.

Qatar National Cement Company (Q.P.S.C.) May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Qatar National Cement Company (Q.P.S.C.)'s earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

Qatar National Cement Company (Q.P.S.C.)'s Dividend Doesn't Look Great

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Qatar National Cement Company (Q.P.S.C.) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.