Dr. Sulaiman Al Habib Medical Services Group (TADAWUL:4013) Will Pay A Larger Dividend Than Last Year At ر.س0.83

The board of Dr. Sulaiman Al Habib Medical Services Group Company (TADAWUL:4013) has announced that it will be increasing its dividend on the 17th of May to ر.س0.83. This takes the annual payment to 1.4% of the current stock price, which is about average for the industry.

See our latest analysis for Dr. Sulaiman Al Habib Medical Services Group

Dr. Sulaiman Al Habib Medical Services Group's Earnings Easily Cover the Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Dr. Sulaiman Al Habib Medical Services Group was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

Over the next year, EPS is forecast to expand by 10.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 64%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dr. Sulaiman Al Habib Medical Services Group Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The first annual payment during the last 2 years was ر.س2.00 in 2020, and the most recent fiscal year payment was ر.س2.80. This means that it has been growing its distributions at 18% per annum over that time. Dr. Sulaiman Al Habib Medical Services Group has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Dr. Sulaiman Al Habib Medical Services Group has been growing its earnings per share at 7.5% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On Dr. Sulaiman Al Habib Medical Services Group's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Dr. Sulaiman Al Habib Medical Services Group's payments are rock solid. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 Dr. Sulaiman Al Habib Medical Services Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Dr. Sulaiman Al Habib Medical Services Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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