Only Three Days Left To Cash In On Rami Levi Chain Stores Hashikma Marketing 2006's (TLV:RMLI) Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Rami Levi Chain Stores Hashikma Marketing 2006 Ltd (TLV:RMLI) is about to go ex-dividend in just three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase Rami Levi Chain Stores Hashikma Marketing 2006's shares on or after the 31st of August will not receive the dividend, which will be paid on the 7th of September.
The company's next dividend payment will be ₪3.6296104 per share, and in the last 12 months, the company paid a total of ₪13.07 per share. Last year's total dividend payments show that Rami Levi Chain Stores Hashikma Marketing 2006 has a trailing yield of 3.8% on the current share price of ₪344.40. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Rami Levi Chain Stores Hashikma Marketing 2006 can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 87% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 50% of its free cash flow in the past year.
It's positive to see that Rami Levi Chain Stores Hashikma Marketing 2006's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
See our latest analysis for Rami Levi Chain Stores Hashikma Marketing 2006
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. 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 Rami Levi Chain Stores Hashikma Marketing 2006 earnings per share are up 4.8% per annum over the last five years. A payout ratio of 87% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Rami Levi Chain Stores Hashikma Marketing 2006 has delivered an average of 11% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Should investors buy Rami Levi Chain Stores Hashikma Marketing 2006 for the upcoming dividend? Earnings per share growth has been modest and Rami Levi Chain Stores Hashikma Marketing 2006 paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. In summary, while it has some positive characteristics, we're not inclined to race out and buy Rami Levi Chain Stores Hashikma Marketing 2006 today.
So while Rami Levi Chain Stores Hashikma Marketing 2006 looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 1 warning sign for Rami Levi Chain Stores Hashikma Marketing 2006 you should know about.
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.