Banque Saudi Fransi's (TADAWUL:1050) Dividend Will Be SAR1.00

Banque Saudi Fransi (TADAWUL:1050) has announced that it will pay a dividend of SAR1.00 per share on the 26th of August. This will take the annual payment to 5.8% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Banque Saudi Fransi

Banque Saudi Fransi's Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Banque Saudi Fransi has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Banque Saudi Fransi's payout ratio of 57% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 25.4% over the next 3 years. The future payout ratio could be 56% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the dividend has gone from SAR0.60 total annually to SAR2.00. This means that it has been growing its distributions at 13% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Banque Saudi Fransi has been growing its earnings per share at 26% a year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

Banque Saudi Fransi Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Banque Saudi Fransi that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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