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Al Moammar Information Systems Company (TADAWUL: 7200) announced that it will pay a dividend of 1.00 per share on January 1. This means that the annual payout will be 1.3% of the current share price, which is in line with the industry average.
While the dividend yield is important for income investors, it is also important to take into account any significant change in the price of the shares, as this will generally outweigh the gains from distributions. Investors will be delighted to see that the Al Moammar Information Systems share price has risen 36% in the past 3 months, which is good for shareholders and may also explain a drop in dividend yield.
Check out our latest analysis for Al Moammar information systems
Al Moammar Information Systems revenues easily cover distributions
Strong dividend yields are great, but they only really help us if the payout is sustainable. The last installment was fairly easily covered by profits, but it represented 108% of cash flow. While the company is focusing more on returning cash to shareholders than growing the business at this time, we believe that such a high cash payout ratio could expose the dividend to a reduction if the company were to meet. difficulties.
Going forward, earnings per share could increase by 16.9% over the next year if the trend of recent years continues. If the dividend continues according to recent trends, we estimate that the payout ratio will be 52%, which is in a range that makes us comfortable with the sustainability of the dividend.
Al Moammar Information Systems continues to build its track record
The company has maintained a constant dividend for a few years now, but we’d like to see a longer history before we put our trust in it. The first annual payment in the last 2 years was. س 1.28 in 2019, and the payment for the most recent year was ر, س 1.76. This works out to a compound annual growth rate (CAGR) of around 17% per year over that time period. Al Moammar Information Systems has increased its dividend quite quickly, which is exciting. However, the short history of payments makes us wonder if this performance will persist throughout a full market cycle.
The dividend seems likely to increase
Investors who have held shares of the company for the past several years will be pleased with the dividend income they have received. It is encouraging to see that Al Moammar Information Systems has increased its earnings per share by 17% per year over the past five years. However, the lack of cash flow makes us a little cautious, especially with regard to the future of the dividend.
Our thoughts on Al Moammar’s information systems dividend
Overall, it’s nice to see a consistent dividend payout, but we believe in the longer term the current payout level could be unsustainable. While Al Moammar Information Systems earns enough to cover payments, cash flow is lacking. We would be a little cautious if we were relying on this security primarily for dividend income.
Market movements testify to the high value of a coherent dividend policy compared to a more unpredictable one. However, there are other things for investors to consider when analyzing the performance of stocks. To this end, Al Moammar Information Systems has 2 warning signs (and 1 which is a bit rude) we think you should be aware of. If you are a dividend investor, you can also check out our curated list of high performing dividend stocks.
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