Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Qatar- Low dividend stocks perform better on Qatar bourse: Expert  Join our daily free Newsletter

MENAFN - The Peninsula - 15/04/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - The Peninsula) High dividend paying stocks on Qatar Exchange have performed significantly worse compared to low dividend paying stocks in the market. A comparative analysis of the performance over the past five years proves this market reality, a top analyst told The Peninsula.

"This may be probably a surprise to many readers since stocks usually see more investor demand in advance of dividend announcements, but quite often they decline afterwards more than the dividend per share payout", Afa Boran (pictured), Head of Asset Management, Amwal said.

As we come to the end of dividends season, it is worth asking the question that 'how important are dividends?' Local investors in the Gulf region widely prefer high dividend paying stocks, and when a company announces an increase in dividends, the market generally responds positively. But investors must really analyse whether this is a sustainable performance or a short-term jump, and high dividends are really an indication of future positive performance of stocks, he said.

Generally stocks with limited growth prospects pay high dividends. Those that are growing rapidly need to retain earnings to be able to invest in their businesses. If a business that has strong growth prospects pays dividends, it would be limiting its ability to grow.

The Amwal analysis also shows that dividends on their own have not proven to be a good predictor of future stock performance."But that doesn't mean dividends have no elevance. Yes, it has. But only if they reflect strong profitability and earnings quality of the underlying company", Afa said.


If a company generates more earnings than it needs to retain for future expansion, distributing this excess reflects prudent financial management and good corporate governance. In rapidly growing economies however, growth prospects are generally greater than the internal cash flows generated by companies. For instance, non-oil GDP growth in Qatar in the last five years has been around 18 percent per year which compares to an average return on capital of around 16 percent for listed companies.

"Dividends are good, but only if growth and investment opportunities are lacking. The only way shareholders receive value directly from the company is through dividends. So from this point of view dividends are key, but not just current dividends but future dividends too," he said.

Fundamentally, he said, a company's worth lies in its ability to generate healthy cash flows, however, for minority investors in the stock market who don't have control over the use of these cash flows, dividend policy as well as a clear understanding of how the cash flows will be deployed are important considerations.

"If a company needs to retain profits to grow future profits and pay out higher dividends in the future, it should do so, rather than pay out high dividends today and be capital deprived. This is particularly true for a country like Qatar," he said.

 


The Peninsula




  MENA News Headlines
 Jun 29 2016 - Kuwait- Speaker Al-Ghanim condemns Turkey's terrorist' attackKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT, June 29 (KUNA) -- National Assembly Speaker Marzouq Ali Al-Ghanim has condemned the terrorist attack that targeted Ataturk Airport in Turkey''s Istanbul ...

 Jun 29 2016 - Iraq parliament chairman arrives in KuwaitKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT, June 29 (KUNA) -- Speaker of the Iraqi parliament Dr. Salim Al-Jabouri, accompanied by a delegation, arrived in Kuwait on Wednesday starting a day-long ...

 Jun 29 2016 - EU ready to work closely with Turkey to fight terrorismKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) BRUSSELS, June 29 (KUNA) -- The European Union reiterated Wednesday its continuing solidarity with Turkey, its government and its people and reaffirmed its ...

 Jun 29 2016 - Japan condemns Turkish airport attackKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) TOKYO, June 29 (KUNA) -- Japan has strongly condemned the terrorist attack that hit the Ataturk International Airport in Istanbul, Turkey, on Tuesday. ...

 Jun 29 2016 - Belgium, NATO condemn Istanbul terror attackKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) BRUSSELS, June 29 (KUNA) -- NATO Secretary General Jens Stoltenberg has strongly condemned the "horrific attacks at Istanbul''s Ataturk Airport " that took place ...

 Jun 29 2016 - Kuwait- His Highness the Amir receives visiting top Iraq legislatorKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT, June 29 (KUNA) -- His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah received, on Wednesday at Seif Palace, the visiting Speaker of Iraqi ...

 Jun 29 2016 - 15 strikes in Syria, 17 in Iraq target IS -- coalitionKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) WASHINGTON, June 29 (KUNA) -- Coalition military forces continued to attack the so-called Islamic State (IS), conducting 15 strikes in Syria and 17 in Iraq, the ...

 Jun 29 2016 - Taynal Mosque, crown jewel of Islamic architecture in LebanonKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) Photo feature by Waseem Haider BEIRUT, June 29 (KUNA) -- The Lebanese capital of Tripoli is home to several architectural treasures that reflect the history of ...

 Jun 29 2016 - Media Invite: Nairobi Launch of Housing, Land and Property PublicationMENAFN Press
(MENAFN Press) Media Invite: Nairobi Launch of Housing, Land and Property Publication OSLO, Norway, June 28, 2016/APO/ -- TO: Media Agencies based in Nairobi, Kenya FROM: Norwegian Refugee Council, ...

 Jun 29 2016 - July 6 Telephonic Press Briefing with Margaret McKelvey, Director, Office of Assistance for Africa Bureau of Population, Refugees, and MigrationMENAFN Press
(MENAFN Press) July 6 Telephonic Press Briefing with Margaret McKelvey, Director, Office of Assistance for Africa Bureau of Population, Refugees, and Migration WASHINGTON D.C., United States of ...

more...


 





Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help