Should Income Investors Look At The Power and Water Utility Company for Jubail and Yanbu (TADAWUL:2083) Before Its Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The Power and Water Utility Company for Jubail and Yanbu (TADAWUL:2083) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Power and Water Utility Company for Jubail and Yanbu's shares before the 18th of March to receive the dividend, which will be paid on the 27th of March.

The company's upcoming dividend is ر.س1.10 a share, following on from the last 12 months, when the company distributed a total of ر.س2.20 per share to shareholders. Based on the last year's worth of payments, Power and Water Utility Company for Jubail and Yanbu stock has a trailing yield of around 2.8% on the current share price of ر.س77.40. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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

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. Last year Power and Water Utility Company for Jubail and Yanbu paid out 94% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. 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. Over the last year it paid out 69% of its free cash flow as dividends, within the usual range for most companies.

It's good to see that while Power and Water Utility Company for Jubail and Yanbu's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 comforting to see Power and Water Utility Company for Jubail and Yanbu's earnings have been skyrocketing, up 23% per annum for the past five years.

Given that Power and Water Utility Company for Jubail and Yanbu has only been paying a dividend for a year, there's not much of a past history to draw insight from.

To Sum It Up

Is Power and Water Utility Company for Jubail and Yanbu worth buying for its dividend? Power and Water Utility Company for Jubail and Yanbu has been growing its earnings per share nicely, although judging by the difference between its profit and cashflow payout ratios, the company might have reported some write-offs over the last year. All things considered, we are not particularly enthused about Power and Water Utility Company for Jubail and Yanbu from a dividend perspective.

So if you want to do more digging on Power and Water Utility Company for Jubail and Yanbu, you'll find it worthwhile knowing the risks that this stock faces. To help with this, we've discovered 2 warning signs for Power and Water Utility Company for Jubail and Yanbu (1 shouldn't be ignored!) that you ought to be aware of before buying the shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.