Stock Analysis

E. Schnapp & Co. Works Ltd (TLV:SHNP) Pays A ₪0.2363154 Dividend In Just Three Days

TASE:SHNP
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Readers hoping to buy E. Schnapp & Co. Works Ltd (TLV:SHNP) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 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 E. Schnapp Works' shares on or after the 30th of May, you won't be eligible to receive the dividend, when it is paid on the 6th of June.

The company's next dividend payment will be ₪0.2363154 per share, on the back of last year when the company paid a total of ₪0.79 to shareholders. Last year's total dividend payments show that E. Schnapp Works has a trailing yield of 6.1% on the current share price of ₪12.89. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether E. Schnapp Works has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for E. Schnapp Works

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. E. Schnapp Works paid out more than half (57%) of its earnings last year, which is a regular payout ratio for most companies. 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. Dividends consumed 75% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that E. Schnapp Works'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 E. Schnapp Works paid out over the last 12 months.

historic-dividend
TASE:SHNP Historic Dividend May 26th 2024

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. That's why it's comforting to see E. Schnapp Works's earnings have been skyrocketing, up 47% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. E. Schnapp Works has delivered 6.2% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

From a dividend perspective, should investors buy or avoid E. Schnapp Works? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see E. Schnapp Works's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 57% and 75% respectively. In summary, it's hard to get excited about E. Schnapp Works from a dividend perspective.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 2 warning signs with E. Schnapp Works and understanding them should be part of your investment process.

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

Valuation is complex, but we're helping make it simple.

Find out whether E. Schnapp Works is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.