Qatar Electricity & Water Company Q.P.S.C. (DSM:QEWS) Will Pay A ر.ق0.80 Dividend In Four Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Qatar Electricity & Water Company Q.P.S.C. (DSM:QEWS) is about to go ex-dividend in just four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Qatar Electricity & Water Company Q.P.S.C's shares on or after the 15th of March, you won't be eligible to receive the dividend, when it is paid on the 1st of January.

The upcoming dividend for Qatar Electricity & Water Company Q.P.S.C will put a total of ر.ق0.80 per share in shareholders' pockets, up from last year's total dividends of ر.ق0.63. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Qatar Electricity & Water Company Q.P.S.C can afford its dividend, and if the dividend could grow.

See our latest analysis for Qatar Electricity & Water Company Q.P.S.C

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Qatar Electricity & Water Company Q.P.S.C's payout ratio is modest, at just 47% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 59% of its free cash flow as dividends, within the usual range 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.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Qatar Electricity & Water Company Q.P.S.C's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

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 Electricity & Water Company Q.P.S.C has lifted its dividend by approximately 0.6% a year on average.

To Sum It Up

Should investors buy Qatar Electricity & Water Company Q.P.S.C for the upcoming dividend? Earnings per share are down very slightly in recent times, and Qatar Electricity & Water Company Q.P.S.C paid out less half its profit and more than half its cash flow as dividends, which is not the worst combination but could be better. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Qatar Electricity & Water Company Q.P.S.C's dividend merits.

If you want to look further into Qatar Electricity & Water Company Q.P.S.C, it's worth knowing the risks this business faces. For example, we've found 1 warning sign for Qatar Electricity & Water Company Q.P.S.C that we recommend you consider before investing in the business.

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.