Sumou Real Estate Company (TADAWUL:4323) is preparing to trade ex-dividend in just a few days. This presents an opportunity for investors to evaluate whether purchasing the stock before the ex-dividend date could be beneficial. Here’s a detailed look at the factors influencing this decision.
Understanding the Ex-Dividend Date
The ex-dividend date is crucial for dividend investors. For Sumou Real Estate, this date is September 16, 2024. To receive the upcoming dividend of ر.س0.50 per share, investors must own the stock before this date. The dividend will be paid on September 30, 2024. Any purchases made on or after the ex-dividend date will not qualify for this payout.
Current Dividend Yield and Payout Ratio
Over the past 12 months, Sumou Real Estate has paid a total of ر.س1.00 per share in dividends, reflecting a trailing yield of approximately 2.4% based on the current stock price of ر.س41.40. A key consideration for dividend investors is whether the company can sustain these payments.
Sustainability of the Dividend
The sustainability of a dividend is often assessed by looking at the payout ratio, which measures the proportion of earnings or cash flow distributed as dividends. For Sumou Real Estate, the dividend payout ratio is relatively low:
Profit Payout Ratio: The company distributed just 23% of its profit as dividends last year. This low payout ratio suggests that the dividend is well-supported by earnings and leaves room for unexpected changes.
Cash Flow Payout Ratio: Similarly, only 22% of its free cash flow was used for dividends. This further indicates that the dividend is sustainable from a cash flow perspective.
Growth Prospects
For a dividend to be attractive, it is crucial not only that it is sustainable but also that it has the potential for growth:
Earnings Growth
Sumou Real Estate has shown a positive trend in earnings per share (EPS), with a growth rate of 9.6% per annum over the past five years. This steady increase in earnings is promising, as it can support future dividend payments and potentially lead to higher dividends.
Dividend Growth
Historically, Sumou Real Estate has increased its dividend by approximately 19% annually over the past four years. This consistent growth in dividends, aligned with rising earnings, is a positive indicator of the company’s commitment to rewarding shareholders.
Final Considerations
Pros:
Sustainable Dividend: Low payout ratios for both earnings and cash flow suggest that the current dividend is secure.
Growth Potential: Strong earnings growth and a history of increasing dividends are encouraging signs.
Cons:
Moderate Earnings Growth: While EPS growth is positive, it is not exceptionally high, which might limit the potential for aggressive dividend increases.
Conclusion
Sumou Real Estate appears to be a solid candidate for dividend investors, with a sustainable payout ratio and a history of dividend growth. However, it is essential to consider the overall growth prospects and risks. Although the dividend is well-supported, it is prudent to be aware of any potential red flags. Our analysis indicates one warning sign for the company, which investors should review before making a purchase.
Investors looking for dividend opportunities might find Sumou Real Estate attractive, but it’s crucial to weigh this against any potential risks and consider the overall investment strategy.
For a broader view of high-yield dividend stocks, explore further investment options and ensure any investment aligns with your financial goals.
