Derayah Financial Company (TADAWUL:4084) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Derayah Financial's shares before the 24th of May in order to be eligible for the dividend, which will be paid on the 4th of June.

The company's next dividend payment will be ر.س0.33 per share. Last year, in total, the company distributed ر.س1.32 to shareholders. Last year's total dividend payments show that Derayah Financial has a trailing yield of 5.9% on the current share price of ر.س22.38. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Derayah Financial paid out 61% of its earnings to investors last year, a normal payout level for most businesses.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Derayah Financial paid out over the last 12 months.

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Derayah Financial's earnings have been skyrocketing, up 31% per annum for the past five years.

Unfortunately Derayah Financial has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

Is Derayah Financial an attractive dividend stock, or better left on the shelf? Earnings per share are growing at an attractive rate, and Derayah Financial is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating Derayah Financial more closely.

Keen to explore more data on Derayah Financial's financial performance? Check out our visualisation of its historical revenue and earnings growth.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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.