Jamjoom Pharmaceuticals Factory Company (TADAWUL:4015) Will Pay A ر.س1.60 Dividend In Three Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Jamjoom Pharmaceuticals Factory Company (TADAWUL:4015) is about to go ex-dividend in just 3 days. 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Jamjoom Pharmaceuticals Factory's shares on or after the 18th of August, you won't be eligible to receive the dividend, when it is paid on the 25th of August.

The company's next dividend payment will be ر.س1.60 per share, on the back of last year when the company paid a total of ر.س3.00 to shareholders. Looking at the last 12 months of distributions, Jamjoom Pharmaceuticals Factory has a trailing yield of approximately 1.9% on its current stock price of ر.س157.60. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Jamjoom Pharmaceuticals Factory

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Jamjoom Pharmaceuticals Factory is paying out an acceptable 56% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Jamjoom Pharmaceuticals Factory generated enough free cash flow to afford its dividend. Fortunately, it paid out only 31% of its free cash flow in the past year.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Jamjoom Pharmaceuticals Factory's earnings per share have dropped 22% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Given that Jamjoom Pharmaceuticals Factory has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Is Jamjoom Pharmaceuticals Factory an attractive dividend stock, or better left on the shelf? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Jamjoom Pharmaceuticals Factory's dividend merits.

However if you're still interested in Jamjoom Pharmaceuticals Factory as a potential investment, you should definitely consider some of the risks involved with Jamjoom Pharmaceuticals Factory. For example, we've found 1 warning sign for Jamjoom Pharmaceuticals Factory that we recommend you consider before investing in the business.

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.