Is It Smart To Buy Altshuler Shaham Finance Ltd (TLV:ALTF) Before It Goes Ex-Dividend?

Readers hoping to buy Altshuler Shaham Finance Ltd (TLV:ALTF) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Altshuler Shaham Finance's shares before the 4th of December in order to receive the dividend, which the company will pay on the 11th of December.

The company's upcoming dividend is ₪0.1109101 a share, following on from the last 12 months, when the company distributed a total of ₪0.43 per share to shareholders. Calculating the last year's worth of payments shows that Altshuler Shaham Finance has a trailing yield of 4.9% on the current share price of ₪8.885. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. Altshuler Shaham Finance paid out just 19% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

See our latest analysis for Altshuler Shaham Finance

Click here to see how much of its profit Altshuler Shaham Finance paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 Altshuler Shaham Finance earnings per share are up 3.9% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Altshuler Shaham Finance's dividend payments per share have declined at 19% per year on average over the past four years, which is uninspiring. Altshuler Shaham Finance is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Should investors buy Altshuler Shaham Finance for the upcoming dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Altshuler Shaham Finance appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while Altshuler Shaham Finance looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 3 warning signs for Altshuler Shaham Finance (2 are significant!) that you ought to be aware of before buying the shares.

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.