Top Ramdor Systems & Computers (1990) (TLV:TOPS) Could Be A Buy For Its Upcoming Dividend

Readers hoping to buy Top Ramdor Systems & Computers Co. (1990) Ltd (TLV:TOPS) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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 Top Ramdor Systems & Computers (1990)'s shares on or after the 15th of April will not receive the dividend, which will be paid on the 5th of May.

The company's next dividend payment will be ₪0.2831842 per share, and in the last 12 months, the company paid a total of ₪0.28 per share. Last year's total dividend payments show that Top Ramdor Systems & Computers (1990) has a trailing yield of 3.2% on the current share price of ₪8.899. 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.

See our latest analysis for Top Ramdor Systems & Computers (1990)

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Top Ramdor Systems & Computers (1990)'s payout ratio is modest, at just 46% of profit. A useful secondary check can be to evaluate whether Top Ramdor Systems & Computers (1990) generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 28% of the free cash flow it generated, which is a comfortable payout ratio.

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 Top Ramdor Systems & Computers (1990) 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Top Ramdor Systems & Computers (1990)'s earnings per share have been growing at 10% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Top Ramdor Systems & Computers (1990) has delivered an average of 13% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Has Top Ramdor Systems & Computers (1990) got what it takes to maintain its dividend payments? Top Ramdor Systems & Computers (1990) has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Top Ramdor Systems & Computers (1990) is facing. Our analysis shows 4 warning signs for Top Ramdor Systems & Computers (1990) and you should be aware of these 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.