Holmes Place International Ltd (TLV:HLMS) Pays A ₪0.1082823 Dividend In Just Three Days
Readers hoping to buy Holmes Place International Ltd (TLV:HLMS) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Holmes Place International investors that purchase the stock on or after the 17th of December will not receive the dividend, which will be paid on the 4th of January.
The company's next dividend payment will be ₪0.1082823 per share. Last year, in total, the company distributed ₪0.36 to shareholders. Based on the last year's worth of payments, Holmes Place International stock has a trailing yield of around 5.2% on the current share price of ₪6.903. If you buy this business for its dividend, you should have an idea of whether Holmes Place International's dividend is reliable and sustainable. As a result, readers should always check whether Holmes Place International has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Holmes Place International distributed an unsustainably high 138% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 42% of its free cash flow as dividends, a comfortable payout level for most companies.
It's good to see that while Holmes Place International's dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.
See our latest analysis for Holmes Place International
Click here to see how much of its profit Holmes Place International 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Holmes Place International earnings per share are up 9.8% per annum over the last five years.
We'd also point out that Holmes Place International issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Holmes Place International has seen its dividend decline 6.5% per annum on average over the past three years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
The Bottom Line
Is Holmes Place International an attractive dividend stock, or better left on the shelf? Earnings per share have grown modestly, and last year Holmes Place International paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Holmes Place International's dividend merits.
If you're not too concerned about Holmes Place International's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 2 warning signs for Holmes Place International that we recommend you consider before investing in the business.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.