Dubai Investments PJSC (DFM: DIC) soon to become ex-dividend

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Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Dubai PJSC Investments (DFM:DIC) is set to go ex-dividend in just three days. The ex-dividend date is usually one business day before the record date which is the latest date by which you must be present on the books of the company as a shareholder in order to receive the dividend. The ex-dividend date is important because any stock transaction must have settled before the record date to be eligible for a dividend. Thus, you can buy the shares of Dubai Investments PJSC before April 20 in order to receive the dividend, which the company will pay on January 1.

The company’s next dividend payment will be د.إ0.12 per share, on the back of last year when the company paid a total of د.إ0.12 to shareholders. Based on last year’s payouts, Dubai Investments PJSC has a yield of 4.6% on the current share price of AED 2.62. Dividends contribute greatly to investment returns for long-term holders, but only if the dividend continues to be paid. Therefore, readers should always check if Dubai Investments PJSC was able to increase its dividend or if the dividend could be reduced.

Check out our latest analysis for Dubai Investments PJSC

Dividends are usually paid out of company profits. If a company pays out more dividends than it earns in profits, then the dividend could be unsustainable. Its dividend payout ratio is 82% of earnings, meaning the company pays out the majority of its earnings. The relatively limited reinvestment of earnings could slow the rate of future earnings growth. We would be concerned about the risk of a drop in income. A useful secondary check may be to assess whether Dubai Investments PJSC has generated sufficient free cash flow to pay its dividend. It distributed 43% of its free cash flow as dividends, a comfortable level of distribution for most companies.

It is positive to see that the Dubai Investments PJSC dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests greater safety margin before the dividend is reduced.

Click here to see how much of its profit Dubai Investments PJSC has paid out in the last 12 months.

DFM: Historic DIC dividend April 16, 2022

Have earnings and dividends increased?

When earnings decline, dividend companies become much more difficult to analyze and to own safely. Investors love dividends, so if earnings fall and the dividend is cut, expect a stock to sell heavily at the same time. Readers will then understand why we are concerned that Dubai Investments PJSC’s earnings per share have fallen by 13% per year over the past five years. When earnings per share decrease, the maximum amount of dividends that can be paid also decreases.

Another key way to gauge a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past 10 years, Dubai Investments PJSC has increased its dividend by around 11% per year on average. It’s intriguing, but the combination of growing dividends despite falling profits can usually only be achieved by paying out a higher percentage of profits. Dubai Investments PJSC already pays out 82% of its profits, and with declining profits, we believe this dividend is unlikely to increase rapidly in the future.

The essential

Does Dubai Investments PJSC have what it takes to maintain its dividend payments? We’re not excited about the decline in earnings per share, although at least the company’s payout ratio is in a reasonable range, meaning it may not be at imminent risk. dividend reduction. To sum up, Dubai Investments PJSC seems correct on this analysis, even if it does not seem like a remarkable opportunity.

That being said, if dividends are not your primary concern with Dubai Investments PJSC, you should be aware of the other risks this company faces. Example: we have identified 1 warning sign for Dubai Investments PJSC you should be aware.

If you are looking for good dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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