Canadian General Medical Center Complex (TADAWUL:9518) Will Pay A Smaller Dividend Than Last Year

Canadian General Medical Center Complex Company's (TADAWUL:9518) dividend is being reduced from last year's payment covering the same period to SAR0.05 on the 25th of May. However, the dividend yield of 2.8% is still a decent boost to shareholder returns.

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Canadian General Medical Center Complex's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Canadian General Medical Center Complex's dividend was only 63% of earnings, however it was paying out 221% of free cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Unless the company can turn things around, EPS could fall by 49.1% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 61%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Check out our latest analysis for Canadian General Medical Center Complex

Canadian General Medical Center Complex's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from an annual total of SAR0.30 in 2021 to the most recent total annual payment of SAR0.19. This works out to a decline of approximately 37% over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Earnings per share has been sinking by 49% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Canadian General Medical Center Complex's Dividend Doesn't Look Sustainable

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 4 warning signs for Canadian General Medical Center Complex (of which 1 is a bit concerning!) you should know about. Is Canadian General Medical Center Complex not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.