Abdullah Saad Mohammed Abo Moati for Bookstores (TADAWUL:4191) Is Paying Out A Dividend Of SAR0.50

Abdullah Saad Mohammed Abo Moati for Bookstores Company (TADAWUL:4191) has announced that it will pay a dividend of SAR0.50 per share on the 15th of September. Including this payment, the dividend yield on the stock will be 2.5%, which is a modest boost for shareholders' returns.

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Abdullah Saad Mohammed Abo Moati for Bookstores' Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Abdullah Saad Mohammed Abo Moati for Bookstores' dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 155% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

EPS is set to grow by 18.3% over the next year if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 80%, which is on the higher side, but certainly still feasible.

Check out our latest analysis for Abdullah Saad Mohammed Abo Moati for Bookstores

Abdullah Saad Mohammed Abo Moati for Bookstores Doesn't Have A Long Payment History

Abdullah Saad Mohammed Abo Moati for Bookstores' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 5 years was SAR0.50 in 2020, and the most recent fiscal year payment was SAR1.00. This means that it has been growing its distributions at 15% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Abdullah Saad Mohammed Abo Moati for Bookstores Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Abdullah Saad Mohammed Abo Moati for Bookstores has grown earnings per share at 18% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Abdullah Saad Mohammed Abo Moati for Bookstores' payments, as there could be some issues with sustaining them into the future. 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 don't think Abdullah Saad Mohammed Abo Moati for Bookstores is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Abdullah Saad Mohammed Abo Moati for Bookstores that investors should know about before committing capital to this stock. 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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