Meitav Trade Investments Ltd (TLV:MTRD) Looks Interesting, And It's About To Pay A Dividend
It looks like Meitav Trade Investments Ltd (TLV:MTRD) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Meitav Trade Investments' shares before the 21st of August to receive the dividend, which will be paid on the 28th of August.
The company's upcoming dividend is ₪0.28 a share, following on from the last 12 months, when the company distributed a total of ₪1.04 per share to shareholders. Last year's total dividend payments show that Meitav Trade Investments has a trailing yield of 4.0% on the current share price of ₪25.85. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. It paid out 78% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Check out our latest analysis for Meitav Trade Investments
Click here to see how much of its profit Meitav Trade Investments paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Meitav Trade Investments has grown its earnings rapidly, up 31% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Meitav Trade Investments's dividend payments per share have declined at 19% per year on average over the past two years, which is uninspiring. 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
From a dividend perspective, should investors buy or avoid Meitav Trade Investments? Earnings per share are growing at an attractive rate, and Meitav Trade Investments is paying out a bit over half its profits. Overall, Meitav Trade Investments looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in Meitav Trade Investments for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Meitav Trade Investments and you should be aware of this before buying any shares.
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.