Saudi Tadawul Group Holding (TADAWUL:1111) Could Be A Buy For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Saudi Tadawul Group Holding Company (TADAWUL:1111) is about to trade ex-dividend in the next 2 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Saudi Tadawul Group Holding's shares before the 8th of May to receive the dividend, which will be paid on the 1st of January.

The company's upcoming dividend is ر.س3.35 a share, following on from the last 12 months, when the company distributed a total of ر.س3.35 per share to shareholders. Looking at the last 12 months of distributions, Saudi Tadawul Group Holding has a trailing yield of approximately 1.8% on its current stock price of ر.س185.20. If you buy this business for its dividend, you should have an idea of whether Saudi Tadawul Group Holding's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Our free stock report includes 2 warning signs investors should be aware of before investing in Saudi Tadawul Group Holding. Read for free now.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Saudi Tadawul Group Holding paid out more than half (74%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Check out our latest analysis for Saudi Tadawul Group Holding

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. It's encouraging to see Saudi Tadawul Group Holding has grown its earnings rapidly, up 29% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last three years, Saudi Tadawul Group Holding has lifted its dividend by approximately 3.7% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Has Saudi Tadawul Group Holding got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and Saudi Tadawul Group Holding is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Saudi Tadawul Group Holding more closely.

On that note, you'll want to research what risks Saudi Tadawul Group Holding is facing. For example, Saudi Tadawul Group Holding has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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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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.