The Tel Aviv Stock Exchange Ltd. (TLV:TASE) the stock is set to trade ex-dividend in 3 days. The ex-dividend date is one business day before the record date, which is the latest date by which shareholders must be present on the books of the company to be eligible for payment of a dividend. The ex-dividend date is important because any trade in a share must have settled before the record date to be eligible for a dividend. In other words, investors can buy shares from the Tel Aviv Stock Exchange before March 30 in order to be eligible for the dividend, which will be paid on April 7.
The company’s next dividend payment will be ₪0.22 per share, following last year when the company paid a total of ₪0.22 to shareholders. Calculating the value of last year’s payments shows that the Tel Aviv Stock Exchange has a yield of 1.4% on the current share price of ₪16.34. We love to see companies pay out a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden hen! We therefore need to determine whether the Tel Aviv Stock Exchange can afford its dividend, and whether the dividend could increase.
See our latest analysis for the Tel Aviv Stock Exchange
Dividends are usually paid out of company profits. If a company pays out more dividends than it earns in profits, then the dividend could be unsustainable. That’s why it’s good to see the Tel Aviv Stock Exchange pay out a modest 50% of its profits.
When a company has paid out less in dividends than it has earned in profits, this generally suggests that its dividend is affordable. The lower the percentage of its profits it pays out, the greater the margin of safety for the dividend if the company goes into a recession.
Click here to see how much profit the Tel Aviv Stock Exchange has paid out over the past 12 months.
Have earnings and dividends increased?
Companies with consistently rising earnings per share tend to create the best dividend-paying stocks because they generally find it easier to increase dividends per share. If business goes into a recession and the dividend is cut, the company could see its value drop precipitously. It is encouraging to see that the Tel Aviv Stock Exchange has grown its profits rapidly, rising 83% per year over the past five years.
Another key way to gauge a company’s dividend outlook is to measure its historical rate of dividend growth. The Tel Aviv Stock Exchange has recorded dividend growth of 59% per year on average over the past two years. Earnings per share and dividends have both increased rapidly lately, which is great to see.
Has the Tel Aviv Stock Exchange got what it needs to maintain its dividend payments? Typically, companies that grow rapidly and pay out only a small fraction of profits retain profits to reinvest in the business. Perhaps more importantly – it can sometimes indicate that management is focused on the long-term future of the company. In summary, the Tel Aviv Stock Exchange looks promising as a dividend-paying stock, and we suggest you take a closer look.
On that note, you’ll want to research the risks that the Tel Aviv Stock Exchange faces. In terms of investment risks, we have identified 1 warning sign with the Tel Aviv Stock Exchange and understanding them should be part of your investment process.
If you are looking for strong dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.