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Should You Buy Bank Leumi le-Israel B.M. (TLV:LUMI) For Its Upcoming Dividend?

Simply Wall St · 08/16 08:52

It looks like Bank Leumi le-Israel B.M. (TLV:LUMI) is about to go 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Bank Leumi le-Israel B.M's shares on or after the 20th of August will not receive the dividend, which will be paid on the 3rd of September.

The company's next dividend payment will be ₪0.6552284 per share. Last year, in total, the company distributed ₪1.93 to shareholders. Calculating the last year's worth of payments shows that Bank Leumi le-Israel B.M has a trailing yield of 3.0% on the current share price of ₪63.40. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. Fortunately Bank Leumi le-Israel B.M's payout ratio is modest, at just 32% of profit.

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 Bank Leumi le-Israel B.M

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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TASE:LUMI Historic Dividend August 16th 2025

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. That's why it's comforting to see Bank Leumi le-Israel B.M's earnings have been skyrocketing, up 22% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Bank Leumi le-Israel B.M has delivered 25% dividend growth per year on average over the past eight years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Is Bank Leumi le-Israel B.M worth buying for its dividend? Companies like Bank Leumi le-Israel B.M that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Bank Leumi le-Israel B.M appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Bank Leumi le-Israel B.M for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Bank Leumi le-Israel B.M you should know about.

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