Should You Buy Jacob Finance and Investments Ltd (TLV:JCFN) For Its Upcoming Dividend?
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Jacob Finance and Investments Ltd (TLV:JCFN) is about to trade ex-dividend in the next four days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. Therefore, if you purchase Jacob Finance and Investments' shares on or after the 14th of August, you won't be eligible to receive the dividend, when it is paid on the 21st of August.
The upcoming dividend for Jacob Finance and Investments will put a total of ₪0.8135307 per share in shareholders' pockets. If you buy this business for its dividend, you should have an idea of whether Jacob Finance and Investments's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Jacob Finance and Investments paid out just 13% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
See our latest analysis for Jacob Finance and Investments
Click here to see how much of its profit Jacob Finance and Investments paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Jacob Finance and Investments earnings per share are up 8.5% per annum over the last five years.
This is Jacob Finance and Investments's first year of paying a regular dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.
The Bottom Line
Has Jacob Finance and Investments got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Jacob Finance and Investments appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
So while Jacob Finance and Investments 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 Jacob Finance and Investments 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.