Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Saudi Lime Industries Company (TADAWUL:9566) is about to go ex-dividend in just four 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Saudi Lime Industries' shares on or after the 13th of April will not receive the dividend, which will be paid on the 30th of April.

The upcoming dividend for Saudi Lime Industries will put a total of ر.س0.20 per share in shareholders' pockets. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

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. Saudi Lime Industries has a low and conservative payout ratio of just 20% of its income after tax.

Click here to see how much of its profit Saudi Lime Industries paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Saudi Lime Industries has grown its earnings rapidly, up 31% a year for the past five years. Saudi Lime Industries earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

This is Saudi Lime Industries's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

Final Takeaway

Is Saudi Lime Industries worth buying for its dividend? Companies like Saudi Lime Industries that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Saudi Lime Industries looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Saudi Lime Industries for the dividends alone, you should always be mindful of the risks involved.

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

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.