Stock Analysis

Mizrahi Tefahot Bank (TLV:MZTF) Could Be A Buy For Its Upcoming Dividend

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Readers hoping to buy Mizrahi Tefahot Bank Ltd. (TLV:MZTF) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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. Thus, you can purchase Mizrahi Tefahot Bank's shares before the 21st of March in order to receive the dividend, which the company will pay on the 28th of March.

The company's next dividend payment will be ₪1.27 per share, and in the last 12 months, the company paid a total of ₪5.22 per share. Looking at the last 12 months of distributions, Mizrahi Tefahot Bank has a trailing yield of approximately 4.5% on its current stock price of ₪115.9. If you buy this business for its dividend, you should have an idea of whether Mizrahi Tefahot Bank's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Mizrahi Tefahot Bank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Mizrahi Tefahot Bank 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 the company's payout ratio, plus analyst estimates of its future dividends.

TASE:MZTF Historic Dividend March 18th 2023

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Mizrahi Tefahot Bank has grown its earnings rapidly, up 24% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last nine years, Mizrahi Tefahot Bank has lifted its dividend by approximately 26% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Has Mizrahi Tefahot Bank got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating Mizrahi Tefahot Bank more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 1 warning sign with Mizrahi Tefahot 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.

Valuation is complex, but we're helping make it simple.

Find out whether Mizrahi Tefahot Bank is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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