Three Days Left To Buy Delta Israel Brands Ltd (TLV:DLTI) Before The Ex-Dividend Date
It looks like Delta Israel Brands Ltd (TLV:DLTI) is about to go ex-dividend in the next three days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Delta Israel Brands' shares on or after the 11th of August will not receive the dividend, which will be paid on the 20th of August.
The company's next dividend payment will be ₪1.1047 per share, and in the last 12 months, the company paid a total of ₪3.97 per share. Based on the last year's worth of payments, Delta Israel Brands stock has a trailing yield of around 3.7% on the current share price of ₪106.80. If you buy this business for its dividend, you should have an idea of whether Delta Israel Brands's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 75% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings. A useful secondary check can be to evaluate whether Delta Israel Brands generated enough free cash flow to afford its dividend. Fortunately, it paid out only 38% of its free cash flow in the past year.
It's positive to see that Delta Israel Brands'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 Delta Israel Brands
Click here to see how much of its profit Delta Israel Brands paid out over the last 12 months.
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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Delta Israel Brands, with earnings per share up 5.5% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last five years, Delta Israel Brands has lifted its dividend by approximately 48% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Has Delta Israel Brands got what it takes to maintain its dividend payments? Earnings per share growth has been modest and Delta Israel Brands paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. To summarise, Delta Israel Brands looks okay on this analysis, although it doesn't appear a stand-out opportunity.
While it's tempting to invest in Delta Israel Brands for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Delta Israel Brands and you should be aware of this before buying any 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.