Read This Before Considering Abu Dhabi National Oil Company for Distribution PJSC (ADX:ADNOCDIST) For Its Upcoming د.إ0.051425 Dividend

Abu Dhabi National Oil Company for Distribution PJSC (ADX:ADNOCDIST) stock is about to trade ex-dividend in two days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Abu Dhabi National Oil Company for Distribution PJSC's shares before the 13th of August to receive the dividend, which will be paid on the 1st of September.

The company's next dividend payment will be د.إ0.051425 per share, on the back of last year when the company paid a total of د.إ0.21 to shareholders. Calculating the last year's worth of payments shows that Abu Dhabi National Oil Company for Distribution PJSC has a trailing yield of 5.1% on the current share price of د.إ4.07. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Abu Dhabi National Oil Company for Distribution PJSC has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Abu Dhabi National Oil Company for Distribution PJSC paid out 72% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Abu Dhabi National Oil Company for Distribution PJSC generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (87%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Abu Dhabi National Oil Company for Distribution PJSC's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Check out our latest analysis for Abu Dhabi National Oil Company for Distribution PJSC

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Abu Dhabi National Oil Company for Distribution PJSC earnings per share are up 8.3% per annum over the last five years. Decent historical earnings per share growth suggests Abu Dhabi National Oil Company for Distribution PJSC has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Abu Dhabi National Oil Company for Distribution PJSC has delivered an average of 17% per year annual increase in its dividend, based on the past eight years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy Abu Dhabi National Oil Company for Distribution PJSC for the upcoming dividend? Earnings per share have been growing modestly and Abu Dhabi National Oil Company for Distribution PJSC paid out a bit over half of its earnings and free cash flow last year. All things considered, we are not particularly enthused about Abu Dhabi National Oil Company for Distribution PJSC from a dividend perspective.

If you want to look further into Abu Dhabi National Oil Company for Distribution PJSC, it's worth knowing the risks this business faces. Be aware that Abu Dhabi National Oil Company for Distribution PJSC is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.