Dr. Sulaiman Al Habib Medical Services Group's (TADAWUL:4013) Dividend Will Be SAR1.15

Dr. Sulaiman Al Habib Medical Services Group Company (TADAWUL:4013) has announced that it will pay a dividend of SAR1.15 per share on the 4th of March. This makes the dividend yield about the same as the industry average at 1.4%.

Check out 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. Before making this announcement, Dr. Sulaiman Al Habib Medical Services Group was paying out quite a large proportion of both earnings and cash flow, with the dividend being 2,739% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

Looking forward, earnings per share is forecast to rise by 56.6% over the next year. If the dividend continues on this path, the payout ratio could be 66% by next year, which we think can be pretty sustainable going forward.

Dr. Sulaiman Al Habib Medical Services Group Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 4 years was SAR2.00 in 2020, and the most recent fiscal year payment was SAR4.68. This implies that the company grew its distributions at a yearly rate of about 24% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Dr. Sulaiman Al Habib Medical Services Group has been growing its earnings per share at 20% a year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

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. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Dr. Sulaiman Al Habib Medical Services Group that investors should take into consideration. 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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