Interested In El-Mor Electric Installation & Services (1986)'s (TLV:ELMR) Upcoming ₪0.17 Dividend? You Have Three Days Left

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that El-Mor Electric Installation & Services (1986) Ltd. (TLV:ELMR) is about to go ex-dividend in just three days. Ex-dividend means that investors that purchase the stock on or after the 25th of March will not receive this dividend, which will be paid on the 13th of April.

El-Mor Electric Installation & Services (1986)'s upcoming dividend is ₪0.17 a share, following on from the last 12 months, when the company distributed a total of ₪0.32 per share to shareholders. Based on the last year's worth of payments, El-Mor Electric Installation & Services (1986) stock has a trailing yield of around 3.9% on the current share price of ₪8.274. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether El-Mor Electric Installation & Services (1986) can afford its dividend, and if the dividend could grow.

See our latest analysis for El-Mor Electric Installation & Services (1986)

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately El-Mor Electric Installation & Services (1986)'s payout ratio is modest, at just 46% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 49% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit El-Mor Electric Installation & Services (1986) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that El-Mor Electric Installation & Services (1986)'s earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

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, three years ago, El-Mor Electric Installation & Services (1986) has lifted its dividend by approximately 21% a year on average.

Final Takeaway

Is El-Mor Electric Installation & Services (1986) an attractive dividend stock, or better left on the shelf? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and El-Mor Electric Installation & Services (1986) is halfway there. There's a lot to like about El-Mor Electric Installation & Services (1986), and we would prioritise taking a closer look at it.

In light of that, while El-Mor Electric Installation & Services (1986) has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 5 warning signs for El-Mor Electric Installation & Services (1986) (1 is significant) you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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