Should You Buy Emilia Development (O.F.G) Ltd. (TLV:EMDV) For Its Upcoming Dividend?

Readers hoping to buy Emilia Development (O.F.G) Ltd. (TLV:EMDV) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days 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. Thus, you can purchase Emilia Development (O.F.G)'s shares before the 15th of April in order to receive the dividend, which the company will pay on the 22nd of April.

The company's upcoming dividend is ₪0.6323009 a share, following on from the last 12 months, when the company distributed a total of ₪0.57 per share to shareholders. Calculating the last year's worth of payments shows that Emilia Development (O.F.G) has a trailing yield of 2.1% on the current share price of ₪26.94. If you buy this business for its dividend, you should have an idea of whether Emilia Development (O.F.G)'s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Emilia Development (O.F.G) paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Check out our latest analysis for Emilia Development (O.F.G)

Click here to see how much of its profit Emilia Development (O.F.G) 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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Emilia Development (O.F.G)'s earnings per share have been growing at 12% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Emilia Development (O.F.G) has delivered 1.3% dividend growth per year on average over the past seven years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Is Emilia Development (O.F.G) an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Emilia Development (O.F.G) is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Emilia Development (O.F.G) more closely.

So while Emilia Development (O.F.G) looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with Emilia Development (O.F.G) and understanding them should be part of your investment process.

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.

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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.