SAL Saudi Logistics Services Company (TADAWUL:4263) Stock Goes Ex-Dividend In Just Three Days

Readers hoping to buy SAL Saudi Logistics Services Company (TADAWUL:4263) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase SAL Saudi Logistics Services' shares on or after the 11th of November will not receive the dividend, which will be paid on the 1st of January.

The company's next dividend payment will be ر.س1.45 per share, and in the last 12 months, the company paid a total of ر.س7.04 per share. Looking at the last 12 months of distributions, SAL Saudi Logistics Services has a trailing yield of approximately 2.5% on its current stock price of ر.س282.00. 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.

Check out our latest analysis for SAL Saudi Logistics Services

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. SAL Saudi Logistics Services has a low and conservative payout ratio of just 18% of its income after tax. 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. It paid out 77% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. SAL Saudi Logistics Services's earnings per share have plummeted approximately 71% a year over the previous five years.

Given that SAL Saudi Logistics Services 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 SAL Saudi Logistics Services worth buying for its dividend? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of SAL Saudi Logistics Services's dividend merits.

So if you want to do more digging on SAL Saudi Logistics Services, you'll find it worthwhile knowing the risks that this stock faces. Our analysis shows 1 warning sign for SAL Saudi Logistics Services and you should be aware of it 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.