Leejam Sports (TADAWUL:1830) Could Be A Buy For Its Upcoming Dividend

It looks like Leejam Sports Company (TADAWUL:1830) is about to go ex-dividend in the next 2 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. Meaning, you will need to purchase Leejam Sports' shares before the 23rd of February to receive the dividend, which will be paid on the 5th of March.

The company's next dividend payment will be ر.س1.18 per share. Last year, in total, the company distributed ر.س3.67 to shareholders. Looking at the last 12 months of distributions, Leejam Sports has a trailing yield of approximately 2.3% on its current stock price of ر.س162.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Leejam Sports

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. Leejam Sports is paying out an acceptable 58% of its profit, a common payout level among most companies.

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

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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Leejam Sports's earnings per share have been growing at 17% a year for the past five years. Leejam Sports has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Leejam Sports has delivered 11% dividend growth per year on average over the past six years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is Leejam Sports worth buying for its dividend? Earnings per share are growing at an attractive rate, and Leejam Sports is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating Leejam Sports more closely.

So while Leejam Sports looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 2 warning signs for Leejam Sports and you should be aware of them before buying any shares.

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.