Here's What We Like About Rami Levi Chain Stores Hashikma Marketing 2006's (TLV:RMLI) Upcoming 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 Rami Levi Chain Stores Hashikma Marketing 2006 Ltd (TLV:RMLI) is about to go ex-dividend in just day or two. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Rami Levi Chain Stores Hashikma Marketing 2006's shares on or after the 29th of August will not receive the dividend, which will be paid on the 5th of September.

The company's next dividend payment will be ₪4.3555325 per share, on the back of last year when the company paid a total of ₪15.03 to shareholders. Looking at the last 12 months of distributions, Rami Levi Chain Stores Hashikma Marketing 2006 has a trailing yield of approximately 7.2% on its current stock price of ₪209.00. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Rami Levi Chain Stores Hashikma Marketing 2006

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 Rami Levi Chain Stores Hashikma Marketing 2006 paying out a modest 39% of its earnings. 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. Dividends consumed 54% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 Rami Levi Chain Stores Hashikma Marketing 2006 paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Rami Levi Chain Stores Hashikma Marketing 2006 earnings per share are up 9.8% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Rami Levi Chain Stores Hashikma Marketing 2006 has delivered 11% dividend growth per year on average over the past 10 years. 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.

The Bottom Line

Has Rami Levi Chain Stores Hashikma Marketing 2006 got what it takes to maintain its dividend payments? Earnings per share growth has been modest, and it's interesting that Rami Levi Chain Stores Hashikma Marketing 2006 is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Rami Levi Chain Stores Hashikma Marketing 2006's dividend merits.

So while Rami Levi Chain Stores Hashikma Marketing 2006 looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 1 warning sign for Rami Levi Chain Stores Hashikma Marketing 2006 you should be aware of.

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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.