Tgi Infrastructures Ltd (TLV:TGI) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Readers hoping to buy Tgi Infrastructures Ltd (TLV:TGI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase Tgi Infrastructures' shares before the 5th of June in order to be eligible for the dividend, which will be paid on the 20th of June.

The company's next dividend payment will be ₪0.047278 per share. If you buy this business for its dividend, you should have an idea of whether Tgi Infrastructures's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Tgi Infrastructures

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Tgi Infrastructures's payout ratio is modest, at just 33% of profit.

Click here to see how much of its profit Tgi Infrastructures 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. 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 Tgi Infrastructures has grown its earnings rapidly, up 55% a year for the past five years. Tgi Infrastructures is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Tgi Infrastructures also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

This is Tgi Infrastructures's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

To Sum It Up

Should investors buy Tgi Infrastructures for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Tgi Infrastructures appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Tgi Infrastructures for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 4 warning signs with Tgi Infrastructures and understanding them should be part of your investment process.

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.