Saudi Electricity proposed a 0.7 riyal per share cash dividend for the year 2018, and the company’s stock edged higher on Wednesday following the announcement.

The company announced in a statement to the Saudi stock exchange that its board of directors has recommended a cash dividend of 70 halala ($0.19) for 2018.

The company had announced the same level of dividend in 2017, but the amount to be paid out has increased by 37 percent to 749.3 million Saudi riyals ($199.8 million), as the company is paying an inaugural dividend to state oil firm Saudi Aramco, which holds 6.8 percent of the company's stock.

“Saudi Electricity maintained SAR (Saudi riyal) 0.70 DPS (dividend per share) inclusive of Saudi Aramco's 289 million shares, allaying investor concerns,” Asim Bukhtiar, head of capital markets research at Saudi Fransi Capital, told Zawya by email.

Saudi Aramco owns 6.93 percent (288.6 million shares) of Saudi Electricity’s capital. In October last year, Saudi Electricity announced in a statement to the exchange the issuance of a decision by the council of ministers to include the shares of Saudi Aramco as beneficiaries in any future dividends. Before the announcement, Saudi Aramco's shares were not entitled to dividends.

Saudi Arabia's Public Investment Fund owns 74.31 percent (3.1 billion shares) of Saudi Electricity's capital, and these shares are not entitled to dividends.

Saudi Electricity’s shares were trading at 16.48 riyals, up 0.98 percent by 15:09 GST on Wednesday and have gained 8.85 percent since the start of the year.

“The shares are preferred holding for income-seeking investors and today's announcement removed uncertainty around downward DPS revision,” Bukhtiar ended.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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