Navigating the Desert of Dividends: Top Middle Eastern Picks for July 2025

The Middle East's economic landscape is in flux, with oil prices oscillating and geopolitical tensions simmering. Yet, amid this volatility, investors can still find refuge in high-yield stocks offering sustainable dividends. For July 2025, two stand out: Saudi Telecom (SASE:7010) and Emaar Properties (DFM:EMAAR). Both deliver attractive yields while maintaining robust financial health—a rarity in an environment where overleveraged firms like Suny Cellular (TASE:SNCM) falter. Here's why these two deserve your attention.

Saudi Telecom: A Telecom Titan with a Fortified Balance Sheet

Saudi Telecom offers a 9.86% dividend yield as of July 2025, one of the highest in the region. What makes this yield sustainable? Its conservative financial metrics:
- Payout Ratio: Just 38.67%, well below the 70% threshold, meaning dividends are comfortably covered by earnings.
- Debt-to-Equity Ratio: A minuscule 0.193, reflecting minimal leverage.
- Interest Coverage Ratio: 13.89x, indicating it can easily cover interest expenses even in a downturn.

While Q2 2025 net income growth figures are unavailable, Q1 2025 results showed a 11.05% year-over-year increase, driven by higher revenues and operational efficiencies. Strategic moves like localizing eSIM technology and partnering with Ooredoo for fiber networks bolster its long-term growth.

Investment Case: The telecom sector's stability and Saudi Arabia's push for digital infrastructure make this a compelling pick. However, investors should monitor Q2 results closely for confirmation of earnings momentum.

Emaar Properties: A Real Estate Beacon with a Strong Balance Sheet

Emaar Properties delivers a 7.43% dividend yield, supported by a fortress-like balance sheet:
- Payout Ratio: 100%, which exceeds the 70% threshold, but is mitigated by AED6.9 billion in cash reserves and an interest coverage ratio of 24x—among the highest in the region.
- Revenue Backlog: A staggering AED127 billion, ensuring future earnings visibility.

While its payout ratio is aggressive, Emaar's debt-to-equity ratio (though unreported here) is likely low given its cash-heavy structure. The company's focus on premium real estate in Dubai—a global hub for tourism and investment—adds resilience to its cash flows.

Investment Case: Despite the high payout ratio, Emaar's liquidity and fortress balance sheet justify its status as a top pick. However, investors must remain alert to Dubai's real estate demand fluctuations and geopolitical risks.

Risks to Monitor: Oil Prices and Geopolitical Volatility

Both stocks operate in sectors less directly tied to oil prices—telecom and real estate—making them relatively insulated. Still, a prolonged oil price slump could indirectly affect regional fiscal policies and consumer spending. Geopolitical tensions, such as those in the Persian Gulf, could also spook investors, though both companies' strong fundamentals should weather such storms better than weaker peers.

The Cautionary Tale: Overleveraged Firms Like Suny Cellular

While Saudi Telecom and Emaar excel in financial discipline, others flounder. Suny Cellular (TASE:SNCM), for instance, carries a debt-to-equity ratio above 3x and a payout ratio nearing 100%, with little cash buffer. Such firms are vulnerable to rising interest rates or earnings shortfalls—a stark contrast to our top picks.

Final Take: Prioritize Sustainability Over Yield

The Middle East's dividend landscape is littered with traps, but Saudi Telecom and Emaar Properties stand out as rare gems. Their low leverage, conservative payout ratios (adjusted for Emaar's cash reserves), and exposure to resilient sectors make them anchors in a volatile region.

Investment Advice:
1. Buy Saudi Telecom for its high yield and financial conservatism.
2. Consider Emaar Properties for its dividend sustainability and exposure to Dubai's real estate boom, despite its high payout ratio.
3. Avoid overleveraged firms like Suny Cellular.
4. Monitor macro risks: Track oil prices and geopolitical developments, but stay patient—these stocks are long-term plays.

In a desert of financial uncertainty, these two stocks offer an oasis of steady returns.

Greg Ip