Dividend Investors: Don't Be Too Quick To Buy Atlas Elevators General Trading & Contracting Company (TADAWUL:9578) For Its Upcoming Dividend

Atlas Elevators General Trading & Contracting Company (TADAWUL:9578) stock is about to trade ex-dividend in day or so. The ex-dividend date is commonly two business days 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase Atlas Elevators General Trading & Contracting's shares before the 12th of October in order to be eligible for the dividend, which will be paid on the 21st of October.

The company's next dividend payment will be ر.س0.50 per share, and in the last 12 months, the company paid a total of ر.س0.50 per share. Calculating the last year's worth of payments shows that Atlas Elevators General Trading & Contracting has a trailing yield of 3.1% on the current share price of ر.س16.32. 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! As a result, readers should always check whether Atlas Elevators General Trading & Contracting has been able to grow its dividends, or if the dividend might be cut.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Atlas Elevators General Trading & Contracting is paying out an acceptable 52% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow.

Check out our latest analysis for Atlas Elevators General Trading & Contracting

Click here to see how much of its profit Atlas Elevators General Trading & Contracting paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Atlas Elevators General Trading & Contracting's 16% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Atlas Elevators General Trading & Contracting's dividend payments per share have declined at 29% per year on average over the past two years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid Atlas Elevators General Trading & Contracting? It's definitely not great to see earnings per share shrinking. The company paid out an acceptable percentage of its income, but an uncomfortably high percentage of its cash flow over the past year. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Atlas Elevators General Trading & Contracting.

Although, if you're still interested in Atlas Elevators General Trading & Contracting and want to know more, you'll find it very useful to know what risks this stock faces. Be aware that Atlas Elevators General Trading & Contracting is showing 5 warning signs in our investment analysis, and 1 of those can't be ignored...

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.