SABIC Agri-Nutrients (TADAWUL:2020) Has Announced That It Will Be Increasing Its Dividend To ر.س3.00

SABIC Agri-Nutrients Company's (TADAWUL:2020) dividend will be increasing to ر.س3.00 on 24th of April. Despite this raise, the dividend yield of 2.3% is only a modest boost to shareholder returns.

See our latest analysis for SABIC Agri-Nutrients

SABIC Agri-Nutrients' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, SABIC Agri-Nutrients' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 18.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from ر.س7.20 in 2012 to the most recent annual payment of ر.س6.00. The dividend has shrunk at around 1.8% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. SABIC Agri-Nutrients has seen EPS rising for the last five years, at 35% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

SABIC Agri-Nutrients Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that SABIC Agri-Nutrients is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 2 warning signs for SABIC Agri-Nutrients (of which 1 doesn't sit too well with us!) you should know about. Is SABIC Agri-Nutrients not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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