Three Days Left Until Generation Capital Ltd (TLV:GNRS) Trades Ex-Dividend

Generation Capital Ltd (TLV:GNRS) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Generation Capital investors that purchase the stock on or after the 7th of September will not receive the dividend, which will be paid on the 6th of October.

The company's next dividend payment will be ₪0.0118106 per share. Last year, in total, the company distributed ₪0.024 to shareholders. Based on the last year's worth of payments, Generation Capital has a trailing yield of 2.1% on the current stock price of ₪1.114. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Generation Capital is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

View our latest analysis for Generation Capital

Click here to see how much of its profit Generation Capital paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Generation Capital's earnings are down 3.7% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, six years ago, Generation Capital has lifted its dividend by approximately 13% a year on average.

To Sum It Up

Has Generation Capital got what it takes to maintain its dividend payments? Generation Capital's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

If you want to look further into Generation Capital, it's worth knowing the risks this business faces. We've identified 3 warning signs with Generation Capital (at least 2 which are a bit concerning), and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.