Is It Smart To Buy Tiv Taam Holdings 1 Ltd. (TLV:TTAM) Before It Goes Ex-Dividend?

Tiv Taam Holdings 1 Ltd. (TLV:TTAM) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Therefore, if you purchase Tiv Taam Holdings 1's shares on or after the 8th of December, you won't be eligible to receive the dividend, when it is paid on the 22nd of December.

The company's next dividend payment will be ₪0.0281679 per share, on the back of last year when the company paid a total of ₪0.11 to shareholders. Based on the last year's worth of payments, Tiv Taam Holdings 1 has a trailing yield of 1.7% on the current stock price of ₪6.347. 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 check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Tiv Taam Holdings 1

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. Tiv Taam Holdings 1 has a low and conservative payout ratio of just 23% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 9.9% of its free cash flow last year.

It's positive to see that Tiv Taam Holdings 1'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 Tiv Taam Holdings 1 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. That's why it's comforting to see Tiv Taam Holdings 1's earnings have been skyrocketing, up 105% per annum for the past five years. Tiv Taam Holdings 1 looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Tiv Taam Holdings 1 has delivered 18% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is Tiv Taam Holdings 1 worth buying for its dividend? It's great that Tiv Taam Holdings 1 is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Tiv Taam Holdings 1 looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Keen to explore more data on Tiv Taam Holdings 1's financial performance? Check out our visualisation of its historical revenue and earnings growth.

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.