Just Three Days Till Abdullah Saad Mohammed Abo Moati for Bookstores Company (TADAWUL:4191) Will Be Trading Ex-Dividend

It looks like Abdullah Saad Mohammed Abo Moati for Bookstores Company (TADAWUL:4191) is about to go ex-dividend in the next three 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 Abdullah Saad Mohammed Abo Moati for Bookstores' shares on or after the 11th of December, you won't be eligible to receive the dividend, when it is paid on the 20th of December.

The company's next dividend payment will be ر.س0.50 per share, and in the last 12 months, the company paid a total of ر.س0.50 per share. Based on the last year's worth of payments, Abdullah Saad Mohammed Abo Moati for Bookstores stock has a trailing yield of around 1.8% on the current share price of SAR27.95. If you buy this business for its dividend, you should have an idea of whether Abdullah Saad Mohammed Abo Moati for Bookstores's dividend is reliable and sustainable. As a result, readers should always check whether Abdullah Saad Mohammed Abo Moati for Bookstores has been able to grow its dividends, or if the dividend might be cut.

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

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Abdullah Saad Mohammed Abo Moati for Bookstores paid out more than half (64%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 15% of its cash flow last year.

It's positive to see that Abdullah Saad Mohammed Abo Moati for Bookstores's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Abdullah Saad Mohammed Abo Moati for Bookstores paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see Abdullah Saad Mohammed Abo Moati for Bookstores's earnings per share have been shrinking at 3.1% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Abdullah Saad Mohammed Abo Moati for Bookstores's dividend payments are broadly unchanged compared to where they were three years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.

The Bottom Line

Is Abdullah Saad Mohammed Abo Moati for Bookstores worth buying for its dividend? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

With that being said, if dividends aren't your biggest concern with Abdullah Saad Mohammed Abo Moati for Bookstores, you should know about the other risks facing this business. Our analysis shows 2 warning signs for Abdullah Saad Mohammed Abo Moati for Bookstores and you should be aware of these before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.