Just Three Days Till Leejam Sports Company (TADAWUL:1830) Will Be Trading Ex-Dividend

Published
May 07, 2022
SASE:1830
Source: Shutterstock

Leejam Sports Company (TADAWUL:1830) stock is about to trade ex-dividend in three 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. 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. Meaning, you will need to purchase Leejam Sports' shares before the 11th of May to receive the dividend, which will be paid on the 23rd of May.

The company's next dividend payment will be ر.س0.47 per share, on the back of last year when the company paid a total of ر.س3.48 to shareholders. Looking at the last 12 months of distributions, Leejam Sports has a trailing yield of approximately 3.1% on its current stock price of SAR110.6. If you buy this business for its dividend, you should have an idea of whether Leejam Sports's dividend is reliable and sustainable. So we need to investigate whether Leejam Sports can afford its dividend, and if the dividend could grow.

View our latest analysis for Leejam Sports

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Leejam Sports paid out more than half (52%) of its earnings last year, which is a regular payout ratio for 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. It distributed 43% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Leejam Sports'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.

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

historic-dividend
SASE:1830 Historic Dividend May 7th 2022

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Leejam Sports earnings per share are up 5.1% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past four years, Leejam Sports has increased its dividend at approximately 16% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is Leejam Sports an attractive dividend stock, or better left on the shelf? While earnings per share growth has been modest, Leejam Sports's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

On that note, you'll want to research what risks Leejam Sports is facing. Our analysis shows 1 warning sign for Leejam Sports and you should be aware of it before buying any shares.

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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