Stock Analysis

Dividend Investors: Don't Be Too Quick To Buy L'azurde Company for Jewelry (TADAWUL:4011) For Its Upcoming Dividend

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It looks like L'azurde Company for Jewelry (TADAWUL:4011) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase L'azurde Company for Jewelry's shares on or after the 3rd of July will not receive the dividend, which will be paid on the 1st of January.

The company's next dividend payment will be ر.س0.25 per share, and in the last 12 months, the company paid a total of ر.س0.25 per share. Looking at the last 12 months of distributions, L'azurde Company for Jewelry has a trailing yield of approximately 1.7% on its current stock price of SAR14.86. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for L'azurde Company for Jewelry

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. L'azurde Company for Jewelry paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies.

Click here to see how much of its profit L'azurde Company for Jewelry paid out over the last 12 months.

SASE:4011 Historic Dividend June 29th 2022

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. L'azurde Company for Jewelry's earnings per share have fallen at approximately 23% 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.

We'd also point out that L'azurde Company for Jewelry issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. L'azurde Company for Jewelry's dividend payments per share have declined at 13% per year on average over the past five 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.

The Bottom Line

Should investors buy L'azurde Company for Jewelry for the upcoming dividend? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

With that being said, if dividends aren't your biggest concern with L'azurde Company for Jewelry, you should know about the other risks facing this business. For instance, we've identified 3 warning signs for L'azurde Company for Jewelry (2 are a bit unpleasant) you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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Find out whether L'azurde Company for Jewelry is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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