Why You Might Be Interested In Suny Cellular Communication Ltd (TLV:SNCM) For Its Upcoming 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 Suny Cellular Communication Ltd (TLV:SNCM) is about to go ex-dividend in just 4 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Suny Cellular Communication's shares before the 29th of May in order to be eligible for the dividend, which will be paid on the 8th of June.

The company's next dividend payment will be ₪0.0460335 per share, and in the last 12 months, the company paid a total of ₪0.092 per share. Last year's total dividend payments show that Suny Cellular Communication has a trailing yield of 7.5% on the current share price of ₪1.346. If you buy this business for its dividend, you should have an idea of whether Suny Cellular Communication's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Suny Cellular Communication paying out a modest 46% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 18% of its free cash flow last year.

It's positive to see that Suny Cellular Communication'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.

Check out our latest analysis for Suny Cellular Communication

Click here to see how much of its profit Suny Cellular Communication 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. That's why it's comforting to see Suny Cellular Communication's earnings have been skyrocketing, up 21% per annum for the past five years. Suny Cellular Communication is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Suny Cellular Communication's dividend payments per share have declined at 14% per year on average over the past four years, which is uninspiring. Suny Cellular Communication is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Has Suny Cellular Communication got what it takes to maintain its dividend payments? It's great that Suny Cellular Communication is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Suny Cellular Communication looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Suny Cellular Communication is facing. In terms of investment risks, we've identified 2 warning signs with Suny Cellular Communication and understanding them should be part of your investment process.

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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.