Read This Before Considering East Pipes Integrated Company for Industry (TADAWUL:1321) For Its Upcoming ر.س1.50 Dividend

It looks like East Pipes Integrated Company for Industry (TADAWUL:1321) is about to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase East Pipes Integrated Company for Industry's shares before the 2nd of January to receive the dividend, which will be paid on the 21st of January.

The company's next dividend payment will be ر.س1.50 per share. Last year, in total, the company distributed ر.س1.50 to shareholders. Last year's total dividend payments show that East Pipes Integrated Company for Industry has a trailing yield of 1.1% on the current share price of ر.س137.80. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for East Pipes Integrated Company for Industry

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. East Pipes Integrated Company for Industry is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether East Pipes Integrated Company for Industry generated enough free cash flow to afford its dividend. It paid out 24% of its free cash flow as dividends last year, which is conservatively low.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit East Pipes Integrated Company for Industry paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. East Pipes Integrated Company for Industry's earnings per share have fallen at approximately 16% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. East Pipes Integrated Company for Industry has delivered an average of 22% per year annual increase in its dividend, based on the past two years of dividend payments.

To Sum It Up

Has East Pipes Integrated Company for Industry got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy East Pipes Integrated Company for Industry today.

On that note, you'll want to research what risks East Pipes Integrated Company for Industry is facing. In terms of investment risks, we've identified 1 warning sign with East Pipes Integrated Company for Industry and understanding them should be part of your investment process.

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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.