Mouwasat Medical Services (TADAWUL:4002) Will Pay A Larger Dividend Than Last Year At 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. The announced payment will take the dividend yield to 1.1%, which is in line with the 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. The last dividend was quite comfortably covered by Mouwasat Medical Services' earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Looking forward, earnings per share is forecast to rise by 13.5% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 49% by next year, which is in a pretty sustainable range.

Mouwasat Medical Services Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was ر.س0.75 in 2012, and the most recent fiscal year payment was ر.س2.75. This means that it has been growing its distributions at 14% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Mouwasat Medical Services has been growing its earnings per share at 18% a year over the past five years. 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

In summary, it's great to see that the company can raise the dividend and keep it 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. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 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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