Bank of Jerusalem Ltd. (TLV:JBNK) Passed Our Checks, And It's About To Pay A ₪0.1769767 Dividend

Bank of Jerusalem Ltd. (TLV:JBNK) stock is about to trade ex-dividend in 2 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. Therefore, if you purchase Bank of Jerusalem's shares on or after the 1st of April, you won't be eligible to receive the dividend, when it is paid on the 8th of April.

The company's next dividend payment will be ₪0.1769767 per share, on the back of last year when the company paid a total of ₪0.48 to shareholders. Last year's total dividend payments show that Bank of Jerusalem has a trailing yield of 3.5% on the current share price of ₪13.96. If you buy this business for its dividend, you should have an idea of whether Bank of Jerusalem'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 Bank of Jerusalem

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. Bank of Jerusalem has a low and conservative payout ratio of just 23% of its income after tax.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Bank of Jerusalem 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. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Bank of Jerusalem, with earnings per share up 9.1% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Bank of Jerusalem has lifted its dividend by approximately 13% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy Bank of Jerusalem for the upcoming dividend? Bank of Jerusalem has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, Bank of Jerusalem looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while Bank of Jerusalem has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 1 warning sign with Bank of Jerusalem 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.