Abdullah Saad Mohammed Abo Moati for Bookstores' (TADAWUL:4191) Dividend Will Be SAR0.50

Abdullah Saad Mohammed Abo Moati for Bookstores Company (TADAWUL:4191) will pay a dividend of SAR0.50 on the 15th of September. Including this payment, the dividend yield on the stock will be 2.6%, which is a modest boost for shareholders' returns.

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Abdullah Saad Mohammed Abo Moati for Bookstores' Projections Indicate Future Payments May Be Unsustainable

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Abdullah Saad Mohammed Abo Moati for Bookstores was paying out quite a large proportion of both earnings and cash flow, with the dividend being 135% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.

EPS is set to grow by 9.8% over the next year if recent trends continue. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 100% over the next year.

See our latest analysis for Abdullah Saad Mohammed Abo Moati for Bookstores

Abdullah Saad Mohammed Abo Moati for Bookstores Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2020, the dividend has gone from SAR0.50 total annually to SAR1.00. This means that it has been growing its distributions at 15% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

We Could See Abdullah Saad Mohammed Abo Moati for Bookstores' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Abdullah Saad Mohammed Abo Moati for Bookstores has impressed us by growing EPS at 9.8% per year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

Abdullah Saad Mohammed Abo Moati for Bookstores' Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Abdullah Saad Mohammed Abo Moati for Bookstores that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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