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

Tgi Infrastructures Ltd (TLV:TGI) stock is about to trade ex-dividend in four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Tgi Infrastructures' shares before the 3rd of September to receive the dividend, which will be paid on the 19th of September.

The upcoming dividend for Tgi Infrastructures will put a total of ₪0.0472781 per share in shareholders' pockets. 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 investigate whether Tgi Infrastructures can afford its dividend, and if the dividend could grow.

View our latest analysis for Tgi Infrastructures

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. Fortunately Tgi Infrastructures's payout ratio is modest, at just 42% of profit. A useful secondary check can be to evaluate whether Tgi Infrastructures generated enough free cash flow to afford its dividend. It paid out more than half (57%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Tgi Infrastructures'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 Tgi Infrastructures 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. 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 59% a year for the past five years.

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, which is exciting for shareholders - but it does mean there's no dividend history to examine.

To Sum It Up

From a dividend perspective, should investors buy or avoid Tgi Infrastructures? Earnings per share have grown at a nice rate in recent times and over the last year, Tgi Infrastructures paid out less than half its earnings and a bit over half its free cash flow. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in Tgi Infrastructures for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 5 warning signs for Tgi Infrastructures that you should be aware of before investing in their shares.

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.