Kingdom Holding (TADAWUL:4280) Will Pay A Dividend Of SAR0.07

Kingdom Holding Company's (TADAWUL:4280) investors are due to receive a payment of SAR0.07 per share on 1st of January. This means the annual payment is 3.2% of the current stock price, which is above the average for the industry.

We've discovered 2 warning signs about Kingdom Holding. View them for free.

Kingdom Holding's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Kingdom Holding's dividend made up quite a large proportion of earnings but only 43% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share is forecast to rise by 20.9% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 66% which would be quite comfortable going to take the dividend forward.

Check out our latest analysis for Kingdom Holding

Kingdom Holding's Dividend Has Lacked Consistency

Looking back, Kingdom Holding's dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2020, the annual payment back then was SAR0.50, compared to the most recent full-year payment of SAR0.28. The dividend has fallen 44% over that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Kingdom Holding's Dividend Might Lack Growth

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. We are encouraged to see that Kingdom Holding has grown earnings per share at 26% per year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Kingdom Holding hasn't been doing.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kingdom Holding's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Kingdom Holding that investors should know about before committing capital to this stock. Is Kingdom Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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