Should You Buy Opal Balance Investments Ltd (TLV:OPAL) For Its Upcoming Dividend?
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Opal Balance Investments Ltd (TLV:OPAL) is about to trade ex-dividend in the next three days. 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. In other words, investors can purchase Opal Balance Investments' shares before the 25th of August in order to be eligible for the dividend, which will be paid on the 1st of September.
The company's upcoming dividend is ₪0.0468425 a share, following on from the last 12 months, when the company distributed a total of ₪0.19 per share to shareholders. Based on the last year's worth of payments, Opal Balance Investments stock has a trailing yield of around 5.9% on the current share price of ₪3.239. If you buy this business for its dividend, you should have an idea of whether Opal Balance Investments's dividend is reliable and sustainable. As a result, readers should always check whether Opal Balance Investments has been able to grow its dividends, or if the dividend might be cut.
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. Opal Balance Investments paid out a comfortable 48% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
View our latest analysis for Opal Balance Investments
Click here to see how much of its profit Opal Balance 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Opal Balance Investments's earnings per share have risen 15% per annum over the last five years.
We'd also point out that Opal Balance Investments 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.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Opal Balance Investments has lifted its dividend by approximately 2.6% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Opal Balance Investments is keeping back more of its profits to grow the business.
To Sum It Up
Is Opal Balance Investments an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. 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, Opal Balance Investments looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
So while Opal Balance Investments looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for Opal Balance Investments (1 is potentially serious!) that deserve your attention before investing in the shares.
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.