Power and Water Utility Company for Jubail and Yanbu (TADAWUL:2083) Has Affirmed Its Dividend Of SAR1.10

The Power and Water Utility Company for Jubail and Yanbu (TADAWUL:2083) has announced that it will pay a dividend of SAR1.10 per share on the 27th of March. This means the annual payment will be 3.0% of the current stock price, which is lower than the industry average.

See our latest analysis for Power and Water Utility Company for Jubail and Yanbu

Power and Water Utility Company for Jubail and Yanbu's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. The last payment made up 94% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 77.6% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 67% which would be quite comfortable going to take the dividend forward.

Power and Water Utility Company for Jubail and Yanbu Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Power and Water Utility Company for Jubail and Yanbu's Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Power and Water Utility Company for Jubail and Yanbu has been growing its earnings per share at 23% a year over the past five years. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.

Our Thoughts On Power and Water Utility Company for Jubail and Yanbu's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Power and Water Utility Company for Jubail and Yanbu's payments, as there could be some issues with sustaining them into the future. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. 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. However, there are other things to consider for investors when analysing stock performance. To that end, Power and Water Utility Company for Jubail and Yanbu has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of 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.