Interested In Dr. Sulaiman Al Habib Medical Services Group's (TADAWUL:4013) Upcoming ر.س1.17 Dividend? You Have Two Days Left

Readers hoping to buy Dr. Sulaiman Al Habib Medical Services Group Company (TADAWUL:4013) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Dr. Sulaiman Al Habib Medical Services Group's shares before the 4th of August in order to receive the dividend, which the company will pay on the 19th of August.

The company's next dividend payment will be ر.س1.17 per share, on the back of last year when the company paid a total of ر.س4.32 to shareholders. Based on the last year's worth of payments, Dr. Sulaiman Al Habib Medical Services Group has a trailing yield of 1.5% on the current stock price of ر.س288.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

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

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Dr. Sulaiman Al Habib Medical Services Group paid out 75% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Dr. Sulaiman Al Habib Medical Services Group generated enough free cash flow to afford its dividend. It paid out 81% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Dr. Sulaiman Al Habib Medical Services Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Dr. Sulaiman Al Habib Medical Services Group has grown its earnings rapidly, up 22% 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. Dr. Sulaiman Al Habib Medical Services Group has delivered 21% dividend growth per year on average over the past four years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Should investors buy Dr. Sulaiman Al Habib Medical Services Group for the upcoming dividend? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. However, we'd also note that Dr. Sulaiman Al Habib Medical Services Group is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

In light of that, while Dr. Sulaiman Al Habib Medical Services Group has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Dr. Sulaiman Al Habib Medical Services Group has 1 warning sign we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com