Regular readers will know we love our dividends at Simply Wall St, which is why it’s exciting to see The National Society of Glass Industries (TADAWUL:2150) is set to trade ex-dividend in the next 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 an important date to know because any purchase of shares made on or after this date may mean late settlement which does not appear on the record date. Thus, you can buy shares of the Société Nationale des Industries Verrières before May 19 in order to receive the dividend that the company will pay on January 1.
The company’s next dividend payment will be ر.س.0.50 per share, and over the past 12 months the company has paid a total of ر.س.0.50 per share. Looking at the last 12 months of distributions, the Société Nationale des Industries du Verre has a yield of around 1.4% on its current share price of SAR36.9. Dividends contribute greatly to investment returns for long-term holders, but only if the dividend continues to be paid. We need to see if the dividend is covered by earnings and if it increases.
See our latest analysis for Société Nationale des Industries Verrières
Dividends are usually paid out of company profits, so if a company pays out more than it has earned, its dividend is usually at risk of being reduced. The Société Nationale des Industries Verrières only pays out 21% of its profit after tax, which is comfortably low and leaves plenty of room for maneuver in the event of adverse events. Still, cash flow is even more important than earnings in evaluating a dividend, so we need to see if the company has generated enough cash to pay its distribution. The good thing is that dividends were well covered by free cash flow, with the company paying out 1.7% of its free cash flow last year.
It is positive to see that the Société Nationale des Industries Verrières dividend is covered by both earnings and cash flow, as this is generally a sign that the dividend is sustainable, and a lower payout rate generally suggests a greater margin of safety before the dividend is cut.
Click here to see how much of its profits the Société Nationale des Industries Verrières has paid out over the past 12 months.
Have earnings and dividends increased?
Companies with consistently rising earnings per share tend to create the best dividend-paying stocks because they generally find it easier to increase dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to sell strongly at the same time. This is why it is heartening to see the revenues of the National Society of Glass Industries skyrocketing, up 27% per year for the past five years. With rapidly growing earnings per share and the company wisely reinvesting almost all of its profits back into the business, the Société Nationale des Industries Verrières appears to be a promising growth company.
Most investors primarily gauge a company’s dividend prospects by checking the historical rate of dividend growth. Dividend payouts per share of Société Nationale des Industries Verrières have fallen by 9.7% per year on average over the past nine years, which is not encouraging. Société Nationale des Industries Verrières is a rare case where dividends have fallen at the same time as earnings per share have improved. It’s unusual to see and could indicate unstable conditions in the core business, or more rarely an increased focus on reinvesting profits.
Has the National Society of Glass Industries succeeded in maintaining its dividends? It’s great that the Société Nationale des Industries du Verre is increasing its earnings per share while simultaneously paying out a small percentage of its profits and cash flow. It’s disappointing to see the dividend cut at least once in the past, but as things stand the low payout ratio suggests a conservative approach to dividends, which we like. It’s a promising combination that should mark this company worthy of attention.
On that note, you will want to research the risks that the National Society of Glass Industries faces. For example, we have identified 2 warning signs for the Société Nationale des Industries Verrières (1 doesn’t sit too well with us) you should know.
If you are looking for good dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.
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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.