Only Three Days Left To Cash In On Foods Gate Trading's (TADAWUL:9562) Dividend

Foods Gate Trading Co. (TADAWUL:9562) is about to trade ex-dividend in the next three 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 important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Foods Gate Trading investors that purchase the stock on or after the 25th of June will not receive the dividend, which will be paid on the 6th of July.

The company's next dividend payment will be ر.س1.00 per share, on the back of last year when the company paid a total of ر.س1.00 to shareholders. Calculating the last year's worth of payments shows that Foods Gate Trading has a trailing yield of 1.8% on the current share price of ر.س55.10. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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. Fortunately Foods Gate Trading's payout ratio is modest, at just 26% of profit.

See our latest analysis for Foods Gate Trading

Click here to see how much of its profit Foods Gate Trading paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Foods Gate Trading's earnings per share have fallen at approximately 5.9% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Unfortunately Foods Gate Trading has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

From a dividend perspective, should investors buy or avoid Foods Gate Trading? Foods Gate Trading 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. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

So if you want to do more digging on Foods Gate Trading, you'll find it worthwhile knowing the risks that this stock faces. For example, Foods Gate Trading has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.