Why You Might Be Interested In El-Mor Electric Installation & Services (1986) Ltd. (TLV:ELMR) For Its Upcoming Dividend

It looks like El-Mor Electric Installation & Services (1986) Ltd. (TLV:ELMR) is about to go ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase El-Mor Electric Installation & Services (1986)'s shares on or after the 8th of September will not receive the dividend, which will be paid on the 18th of September.

The company's next dividend payment will be ₪0.30 per share. Last year, in total, the company distributed ₪0.50 to shareholders. Looking at the last 12 months of distributions, El-Mor Electric Installation & Services (1986) has a trailing yield of approximately 4.7% on its current stock price of ₪10.64. 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.

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

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see El-Mor Electric Installation & Services (1986) paying out a modest 50% of its earnings. A useful secondary check can be to evaluate whether El-Mor Electric Installation & Services (1986) generated enough free cash flow to afford its dividend. It paid out more than half (61%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that El-Mor Electric Installation & Services (1986)'s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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 with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at El-Mor Electric Installation & Services (1986), with earnings per share up 8.1% on average over the last five years. Decent historical earnings per share growth suggests El-Mor Electric Installation & Services (1986) has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last six years, El-Mor Electric Installation & Services (1986) has lifted its dividend by approximately 19% 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.

Final Takeaway

Is El-Mor Electric Installation & Services (1986) an attractive dividend stock, or better left on the shelf? Earnings per share have been growing at a steady rate, and El-Mor Electric Installation & Services (1986) paid out less than half its profits and more than half its free cash flow as dividends over the last year. All things considered, we are not particularly enthused about El-Mor Electric Installation & Services (1986) from a dividend perspective.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - El-Mor Electric Installation & Services (1986) has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.