FMS Enterprises Migun Ltd (TLV:FBRT) Is About To Go Ex-Dividend, And It Pays A 3.7% Yield

FMS Enterprises Migun Ltd (TLV:FBRT) stock is about to trade ex-dividend in four days. The ex-dividend date occurs one day 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase FMS Enterprises Migun's shares on or after the 17th of April will not receive the dividend, which will be paid on the 8th of May.

The company's next dividend payment will be US$1.63133 per share, and in the last 12 months, the company paid a total of US$1.63 per share. Based on the last year's worth of payments, FMS Enterprises Migun has a trailing yield of 3.7% on the current stock price of ₪162.70. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for FMS Enterprises Migun

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. FMS Enterprises Migun is paying out an acceptable 56% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out more than half (58%) of its free cash flow in the past year, which is within an average range for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit FMS Enterprises Migun 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, FMS Enterprises Migun's earnings per share have been growing at 20% a year for the past five years. FMS Enterprises Migun is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. FMS Enterprises Migun has seen its dividend decline 5.7% per annum on average over the past 10 years, which is not great to see. FMS Enterprises Migun 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

Should investors buy FMS Enterprises Migun for the upcoming dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see FMS Enterprises Migun's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 56% and 58% respectively. All things considered, we are not particularly enthused about FMS Enterprises Migun from a dividend perspective.

While it's tempting to invest in FMS Enterprises Migun for the dividends alone, you should always be mindful of the risks involved. For example, FMS Enterprises Migun has 2 warning signs (and 1 which can't be ignored) we think you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.