Stock Analysis

Riyad Bank's (TADAWUL:1010) Shareholders Will Receive A Bigger Dividend Than Last Year

Source: Shutterstock

Riyad Bank (TADAWUL:1010) will increase its dividend from last year's comparable payment on the 2nd of April to SAR0.75. This will take the annual payment to 4.8% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Riyad Bank

Riyad Bank's Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having distributed dividends for at least 10 years, Riyad Bank has a long history of paying out a part of its earnings to shareholders. Based on Riyad Bank's last earnings report, the payout ratio is at a decent 54%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 23.6%. The future payout ratio could be 52% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

SASE:1010 Historic Dividend March 2nd 2024

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 SAR0.65 in 2014, and the most recent fiscal year payment was SAR1.50. This means that it has been growing its distributions at 8.7% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Riyad Bank has grown earnings per share at 20% per year over the past five years. Riyad Bank is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like Riyad Bank's Dividend

Overall, a dividend increase is always good, and we think that Riyad Bank is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Riyad Bank that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Valuation is complex, but we're helping make it simple.

Find out whether Riyad Bank is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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

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.