Amlak International for Real Estate Finance's (TADAWUL:1182) Dividend Will Be Increased To ر.س0.85

Amlak International for Real Estate Finance Company's (TADAWUL:1182) dividend will be increasing on the 1st of June to ر.س0.85, with investors receiving 6.3% more than last year. This makes the dividend yield about the same as the industry average at 3.8%.

Check out our latest analysis for Amlak International for Real Estate Finance

Amlak International for Real Estate Finance's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Amlak International for Real Estate Finance's dividend was only 67% of earnings, however it was paying out 211% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Unless the company can turn things around, EPS could fall by 0.4% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 73%, which is definitely feasible to continue.

Amlak International for Real Estate Finance Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Unfortunately, Amlak International for Real Estate Finance's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Amlak International for Real Estate Finance's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Amlak International for Real Estate Finance has 2 warning signs (and 1 which is concerning) we think you should know about. Is Amlak International for Real Estate Finance not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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