Israel Discount Bank Limited (TLV:DSCT) Looks Interesting, And It's About To Pay A Dividend

Readers hoping to buy Israel Discount Bank Limited (TLV:DSCT) 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 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. In other words, investors can purchase Israel Discount Bank's shares before the 28th of November in order to be eligible for the dividend, which will be paid on the 12th of December.

The company's next dividend payment will be ₪0.2757453 per share, on the back of last year when the company paid a total of ₪0.84 to shareholders. Last year's total dividend payments show that Israel Discount Bank has a trailing yield of 3.5% on the current share price of ₪23.94. 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 Israel Discount Bank has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Israel Discount Bank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Israel Discount Bank paid out a comfortable 28% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 Israel Discount Bank has grown its earnings rapidly, up 21% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last seven years, Israel Discount Bank has lifted its dividend by approximately 34% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Has Israel Discount Bank got what it takes to maintain its dividend payments? Companies like Israel Discount Bank that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Israel Discount Bank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Israel Discount Bank is facing. In terms of investment risks, we've identified 1 warning sign with Israel Discount Bank and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.