Two Days Left Until Saudi Manpower Solutions Company (TADAWUL:1834) Trades Ex-Dividend

It looks like Saudi Manpower Solutions Company (TADAWUL:1834) is about to go ex-dividend in the next 2 days. 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. Thus, you can purchase Saudi Manpower Solutions' shares before the 25th of August in order to receive the dividend, which the company will pay on the 7th of September.

The company's upcoming dividend is ر.س0.12 a share, following on from the last 12 months, when the company distributed a total of ر.س0.26 per share to shareholders. Based on the last year's worth of payments, Saudi Manpower Solutions has a trailing yield of 4.4% on the current stock price of ر.س5.93. If you buy this business for its dividend, you should have an idea of whether Saudi Manpower Solutions's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Saudi Manpower Solutions paying out a modest 43% of its earnings. A useful secondary check can be to evaluate whether Saudi Manpower Solutions generated enough free cash flow to afford its dividend. It paid out 77% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Saudi Manpower Solutions's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for Saudi Manpower Solutions

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Saudi Manpower Solutions's earnings per share have fallen at approximately 6.7% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Given that Saudi Manpower Solutions has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Should investors buy Saudi Manpower Solutions for the upcoming dividend? Earnings per share have fallen significantly, although at least Saudi Manpower Solutions paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

Wondering what the future holds for Saudi Manpower Solutions? See what the three analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.