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متابعة

A company is distributing dividend for each year regardless of its-for the year-business profitability, does that depict a safe place to investment?

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تم إضافة السؤال من قبل Muhammad Ahsan , General Accountant , Emirates Hospitals Group
تاريخ النشر: 2014/04/21
Fuzail Zubaid Ahmad MBA CPA CMA
من قبل Fuzail Zubaid Ahmad MBA CPA CMA , Vice President Finance , Nesaj Real Estate Development Company

No.  Dividends can only be paid from Free Cash Flows to Equity (FCFE), but minor deviations are acceptable if the company is only trying to maintain a certain level of payouts.  If a company is consistently paying dividends more than its FCFE then it might also mean it is in the process of raising its debt leverage on purpose.  In such cases, it may be a good investment but not otherwise. 

Mukkaram Siddique
من قبل Mukkaram Siddique , Finance, Management & Stocks , Amazon Foods Saudi Arabia

It indicates two views.

Either the company pays from its reserves in case of loss

or it gets further debt to pay off the dividends

 

For a short span of time it may be said that its worthwhile to invest in such risky area, but for long term the company can get into liquidity issues were it will be even difficult to get anything out of company.

NIZAR PUTTENKUNNU
من قبل NIZAR PUTTENKUNNU , Group Finance Manager , Refa Gifts Markets LLC & Group of Companies

No.  These types of "divident paying" companies destroys the concepts of investment.

هل تحتاج لمساعدة في كتابة سيرة ذاتية تحتوي على الكلمات الدلالية التي يبحث عنها أصحاب العمل؟