CATRION Catering Holding Company (TADAWUL:6004) Stock Goes Ex-Dividend In Just Two Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that CATRION Catering Holding Company (TADAWUL:6004) is about to go ex-dividend in just two days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Therefore, if you purchase CATRION Catering Holding's shares on or after the 4th of April, you won't be eligible to receive the dividend, when it is paid on the 24th of April.

The company's next dividend payment will be ر.س1.10 per share, on the back of last year when the company paid a total of ر.س2.00 to shareholders. Based on the last year's worth of payments, CATRION Catering Holding stock has a trailing yield of around 1.7% on the current share price of ر.س126.60. If you buy this business for its dividend, you should have an idea of whether CATRION Catering Holding's dividend is reliable and sustainable. So we need to investigate whether CATRION Catering Holding can afford its dividend, and if the dividend could grow.

Check out our latest analysis for CATRION Catering Holding

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CATRION Catering Holding paid out a comfortable 38% of its profit last year. A useful secondary check can be to evaluate whether CATRION Catering Holding generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 26% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see CATRION Catering Holding's earnings per share have dropped 9.3% a year over 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. CATRION Catering Holding's dividend payments per share have declined at 7.9% per year on average over the past 10 years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

To Sum It Up

Is CATRION Catering Holding an attractive dividend stock, or better left on the shelf? CATRION Catering Holding has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's hard to get excited about CATRION Catering Holding from a dividend perspective.

So while CATRION Catering Holding looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 1 warning sign for CATRION Catering Holding you should be aware of.

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.