Here's What We Like About United Mining Industries' (TADAWUL:9583) Upcoming Dividend

Simply Wall St · 08/31 06:28

It looks like United Mining Industries Company (TADAWUL:9583) is about to go ex-dividend in the next three 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, United Mining Industries investors that purchase the stock on or after the 4th of September will not receive the dividend, which will be paid on the 17th of September.

The company's next dividend payment will be ر.س0.70 per share, and in the last 12 months, the company paid a total of ر.س1.40 per share. Calculating the last year's worth of payments shows that United Mining Industries has a trailing yield of 4.8% on the current share price of ر.س29.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for United Mining Industries

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. United Mining Industries paid out 55% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 36% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit United Mining Industries paid out over the last 12 months.

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SASE:9583 Historic Dividend August 31st 2024

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, it's good to see earnings have grown 13% on last year. United Mining Industries is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.

Unfortunately United Mining Industries has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Is United Mining Industries an attractive dividend stock, or better left on the shelf? We like United Mining Industries's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.

So while United Mining Industries looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that United Mining Industries is showing 4 warning signs in our investment analysis, and 1 of those is potentially serious...

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