Mizrahi Tefahot Bank Ltd. (TLV:MZTF) Passed Our Checks, And It's About To Pay A ₪2.741765 Dividend
Readers hoping to buy Mizrahi Tefahot Bank Ltd. (TLV:MZTF) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase Mizrahi Tefahot Bank's shares on or after the 24th of August, you won't be eligible to receive the dividend, when it is paid on the 31st of August.
The company's upcoming dividend is ₪2.741765 a share, following on from the last 12 months, when the company distributed a total of ₪10.34 per share to shareholders. Based on the last year's worth of payments, Mizrahi Tefahot Bank has a trailing yield of 4.5% on the current stock price of ₪232.20. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Mizrahi Tefahot Bank can afford its dividend, and if the dividend could grow.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Mizrahi Tefahot Bank paying out a modest 50% of its earnings.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Check out our latest analysis for Mizrahi Tefahot Bank
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Mizrahi Tefahot Bank's earnings have been skyrocketing, up 26% per annum for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Mizrahi Tefahot Bank has lifted its dividend by approximately 38% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Is Mizrahi Tefahot Bank worth buying for its dividend? Companies like Mizrahi Tefahot Bank that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Mizrahi Tefahot Bank looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
So while Mizrahi Tefahot Bank looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 1 warning sign for Mizrahi Tefahot Bank you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.