Why You Might Be Interested In El-Mor Electric Installation & Services (1986) Ltd. (TLV:ELMR) For Its Upcoming Dividend

It looks like El-Mor Electric Installation & Services (1986) Ltd. (TLV:ELMR) is about to go ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, El-Mor Electric Installation & Services (1986) investors that purchase the stock on or after the 17th of April will not receive the dividend, which will be paid on the 5th of May.

The company's upcoming dividend is ₪0.24 a share, following on from the last 12 months, when the company distributed a total of ₪0.46 per share to shareholders. Calculating the last year's worth of payments shows that El-Mor Electric Installation & Services (1986) has a trailing yield of 4.5% on the current share price of ₪10.21. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether El-Mor Electric Installation & Services (1986) has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for El-Mor Electric Installation & Services (1986)

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. El-Mor Electric Installation & Services (1986) paid out a comfortable 43% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (51%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that El-Mor Electric Installation & Services (1986)'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.

Click here to see how much of its profit El-Mor Electric Installation & Services (1986) 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. For this reason, we're glad to see El-Mor Electric Installation & Services (1986)'s earnings per share have risen 19% per annum over the last five years. El-Mor Electric Installation & Services (1986) has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. 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. In the last six years, El-Mor Electric Installation & Services (1986) has lifted its dividend by approximately 17% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Is El-Mor Electric Installation & Services (1986) 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. There's a lot to like about El-Mor Electric Installation & Services (1986), and we would prioritise taking a closer look at it.

In light of that, while El-Mor Electric Installation & Services (1986) has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 3 warning signs for El-Mor Electric Installation & Services (1986) that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.