Qatar National Cement Company (Q.P.S.C.)’s (DSM:QNCD) dividend is being reduced by 10.0% to QAR0.27 per share on 1st of January, in comparison to last year’s comparable payment of QAR0.30. The yield is still above the industry average at 7.6%.

Check out our latest analysis for Qatar National Cement Company (Q.P.S.C.)

Qatar National Cement Company (Q.P.S.C.)’s Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn’t matter much if the payments can’t be sustained. Prior to this announcement, the company was paying out 105% of what it was earning. It will be difficult to sustain this level of payout so we wouldn’t be confident about this continuing.

If the company can’t turn things around, EPS could fall by 1.5% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 108%, which could put the dividend in jeopardy if the company’s earnings don’t improve.

Dividend Volatility

The company has a long dividend track record, but it doesn’t look great with cuts in the past. The dividend has gone from an annual total of QAR0.301 in 2015 to the most recent total annual payment of QAR0.30. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. A company that decreases its dividend over time generally isn’t what we are looking for.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Unfortunately, Qatar National Cement Company (Q.P.S.C.)’s earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

We’re Not Big Fans Of Qatar National Cement Company (Q.P.S.C.)’s Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company’s earnings aren’t high enough to be making such big distributions, and it isn’t backed up by strong growth or consistency either. We don’t think that this is a great candidate to be an income stock.

It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we’ve picked out 1 warning sign for Qatar National Cement Company (Q.P.S.C.) that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.