Israel Discount Bank (TLV:DSCT) Is Increasing Its Dividend To ₪0.2879

Israel Discount Bank Limited (TLV:DSCT) has announced that it will be increasing its dividend from last year's comparable payment on the 3rd of September to ₪0.2879. This takes the annual payment to 2.9% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Israel Discount Bank

Israel Discount Bank's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Israel Discount Bank has a good history of paying out dividends, with its current track record at 5 years. Taking data from its last earnings report, calculating for the company's payout ratio of 26%shows that Israel Discount Bank would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 8.9%. The future payout ratio could be 34% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Israel Discount Bank's Dividend Has Lacked Consistency

It's comforting to see that Israel Discount Bank has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2018, the dividend has gone from ₪0.11 total annually to ₪0.565. This works out to be a compound annual growth rate (CAGR) of approximately 39% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Israel Discount Bank has impressed us by growing EPS at 23% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Israel Discount Bank Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Israel Discount Bank that you should be aware of before investing. Is Israel Discount Bank not quite the opportunity you were looking for? Why not check out 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.