There's A Lot To Like About RSL Electronics' (TLV:RSEL) Upcoming ₪0.2469702 Dividend

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 RSL Electronics Ltd. (TLV:RSEL) is about to go ex-dividend in just four 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. This means that investors who purchase RSL Electronics' shares on or after the 4th of April will not receive the dividend, which will be paid on the 18th of April.

The company's next dividend payment will be ₪0.2469702 per share, and in the last 12 months, the company paid a total of ₪0.38 per share. Based on the last year's worth of payments, RSL Electronics stock has a trailing yield of around 5.4% on the current share price of ₪7.042. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether RSL Electronics can afford its dividend, and if the dividend could grow.

View our latest analysis for RSL Electronics

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. RSL Electronics paid out more than half (52%) of its earnings last year, which is a regular payout ratio for most companies.

Click here to see how much of its profit RSL Electronics 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see RSL Electronics's earnings have been skyrocketing, up 94% per annum for the past five years.

Given that RSL Electronics has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Is RSL Electronics worth buying for its dividend? We like RSL Electronics's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of RSL Electronics's dividend merits.

While it's tempting to invest in RSL Electronics for the dividends alone, you should always be mindful of the risks involved. For example, we've found 4 warning signs for RSL Electronics that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.