Should You Buy Mizrahi Tefahot Bank Ltd. (TLV:MZTF) For Its Upcoming Dividend?

Mizrahi Tefahot Bank Ltd. (TLV:MZTF) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Meaning, you will need to purchase Mizrahi Tefahot Bank's shares before the 30th of May to receive the dividend, which will be paid on the 6th of June.

The company's upcoming dividend is ₪1.9700411 a share, following on from the last 12 months, when the company distributed a total of ₪4.94 per share to shareholders. Last year's total dividend payments show that Mizrahi Tefahot Bank has a trailing yield of 3.7% on the current share price of ₪133.60. If you buy this business for its dividend, you should have an idea of whether Mizrahi Tefahot Bank's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See 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. That's why it's good to see Mizrahi Tefahot Bank paying out a modest 28% of its earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Mizrahi Tefahot Bank paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 29% 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. Mizrahi Tefahot Bank has delivered an average of 22% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is Mizrahi Tefahot Bank an attractive dividend stock, or better left on the shelf? 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. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. 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. To help with this, we've discovered 1 warning sign for Mizrahi Tefahot Bank that you should be aware of before investing in their shares.

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.