National Gas & Industerialization Co. (TADAWUL:2080) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a 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. Therefore, if you purchase National Gas & Industerialization's shares on or after the 23rd of June, you won't be eligible to receive the dividend, when it is paid on the 1st of January.
The company's next dividend payment will be ر.س0.50 per share. Last year, in total, the company distributed ر.س0.50 to shareholders. Looking at the last 12 months of distributions, National Gas & Industerialization has a trailing yield of approximately 1.2% on its current stock price of SAR43.1. If you buy this business for its dividend, you should have an idea of whether National Gas & Industerialization's dividend is reliable and sustainable. So we need to investigate whether National Gas & Industerialization can afford its dividend, and if the dividend could grow.
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. National Gas & Industerialization is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at National Gas & Industerialization, with earnings per share up 7.9% on average over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. National Gas & Industerialization has seen its dividend decline 13% per annum on average over the past eight years, which is not great to see. National Gas & Industerialization is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
To Sum It Up
Has National Gas & Industerialization got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, National Gas & Industerialization appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
In light of that, while National Gas & Industerialization has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for National Gas & Industerialization (1 is potentially serious!) that you ought to be aware of before buying the shares.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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.
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