Why You Might Be Interested In Gav-Yam Lands Corp. Ltd (TLV:GVYM) For Its Upcoming Dividend
It looks like Gav-Yam Lands Corp. Ltd (TLV:GVYM) 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. 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. Thus, you can purchase Gav-Yam Lands' shares before the 9th of November in order to receive the dividend, which the company will pay on the 16th of November.
The company's next dividend payment will be ₪0.271984 per share. Last year, in total, the company distributed ₪1.29 to shareholders. Last year's total dividend payments show that Gav-Yam Lands has a trailing yield of 3.6% on the current share price of ₪36.13. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Gav-Yam Lands paid out just 8.4% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Over the last year it paid out 74% of its free cash flow as dividends, within the usual range for most companies.
It's positive to see that Gav-Yam Lands'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.
See our latest analysis for Gav-Yam Lands
Click here to see how much of its profit Gav-Yam Lands 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Gav-Yam Lands has grown its earnings rapidly, up 22% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Gav-Yam Lands has increased its dividend at approximately 5.6% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
Is Gav-Yam Lands worth buying for its dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Be aware that Gav-Yam Lands is showing 4 warning signs in our investment analysis, and 2 of those are concerning...
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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