The National Company for Glass Industries (TADAWUL:2150) Will Pay A ر.س0.90 Dividend In Three Days

Readers hoping to buy The National Company for Glass Industries (TADAWUL:2150) 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 a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Meaning, you will need to purchase National Company for Glass Industries' shares before the 16th of December to receive the dividend, which will be paid on the 29th of December.

The company's upcoming dividend is ر.س0.90 a share, following on from the last 12 months, when the company distributed a total of ر.س1.20 per share to shareholders. Based on the last year's worth of payments, National Company for Glass Industries has a trailing yield of 3.2% on the current stock price of ر.س55.60. If you buy this business for its dividend, you should have an idea of whether National Company for Glass Industries's dividend is reliable and sustainable. As a result, readers should always check whether National Company for Glass Industries has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for National Company for Glass Industries

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately National Company for Glass Industries's payout ratio is modest, at just 36% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the past year it paid out 200% of its free cash flow as dividends, which is uncomfortably high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.

While National Company for Glass Industries's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were National Company for Glass Industries to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit National Company for Glass Industries paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see National Company for Glass Industries's earnings have been skyrocketing, up 26% per annum for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, National Company for Glass Industries has increased its dividend at approximately 3.7% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Has National Company for Glass Industries got what it takes to maintain its dividend payments? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. In summary, while it has some positive characteristics, we're not inclined to race out and buy National Company for Glass Industries today.

In light of that, while National Company for Glass Industries has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for National Company for Glass Industries you should be aware of.

If you're in the market for strong dividend payers, we recommend checking 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.