Al Obeikan Glass Company (TADAWUL:9531) Passed Our Checks, And It's About To Pay A ر.س2.00 Dividend

Al Obeikan Glass Company (TADAWUL:9531) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Al Obeikan Glass investors that purchase the stock on or after the 26th of March will not receive the dividend, which will be paid on the 1st of April.

The company's next dividend payment will be ر.س2.00 per share. Last year, in total, the company distributed ر.س2.00 to shareholders. Calculating the last year's worth of payments shows that Al Obeikan Glass has a trailing yield of 4.2% on the current share price of ر.س47.50. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Al Obeikan Glass can afford its dividend, and if the dividend could grow.

See our latest analysis for Al Obeikan Glass

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Al Obeikan Glass paying out a modest 34% of its earnings. A useful secondary check can be to evaluate whether Al Obeikan Glass generated enough free cash flow to afford its dividend.

Click here to see how much of its profit Al Obeikan Glass paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Al Obeikan Glass's earnings have been skyrocketing, up 28% per annum for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Al Obeikan Glass has delivered 63% dividend growth per year on average over the past two years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

From a dividend perspective, should investors buy or avoid Al Obeikan Glass? Al Obeikan Glass has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past two years, but the conservative payout ratio makes the current dividend look sustainable. Al Obeikan Glass looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Al Obeikan Glass is facing. Case in point: We've spotted 2 warning signs for Al Obeikan Glass you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.