Mouwasat Medical Services (TADAWUL:4002) Is Increasing Its Dividend To ر.س2.75

Mouwasat Medical Services Company (TADAWUL:4002) has announced that it will be increasing its dividend on the 1st of January to ر.س2.75. This takes the annual payment to 1.2% of the current stock price, which is about average for the industry.

View our latest analysis for Mouwasat Medical Services

Mouwasat Medical Services' Earnings Easily Cover the Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Mouwasat Medical Services was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. The business is earning enough to make the dividend feasible, but the cash payout ratio of 78% indicates it is more focused on returning cash to shareholders than growing the business.

The next year is set to see EPS grow by 17.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.

Mouwasat Medical Services Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the first annual payment was ر.س0.75, compared to the most recent full-year payment of ر.س2.75. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Mouwasat Medical Services has seen EPS rising for the last five years, at 18% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. However, lack of cash flows makes us wary of the potential for cuts in the dividend's future, even though the dividend is generally looking okay. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 7 analysts we track are forecasting for Mouwasat Medical Services for free with public analyst estimates for the company. Is Mouwasat Medical Services not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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