Should You Buy More Provident Funds Ltd (TLV:MPP) For Its Upcoming Dividend?

It looks like More Provident Funds Ltd (TLV:MPP) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day 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. 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. Meaning, you will need to purchase More Provident Funds' shares before the 25th of August to receive the dividend, which will be paid on the 2nd of September.

The upcoming dividend for More Provident Funds will put a total of ₪0.0546498 per share in shareholders' pockets. If you buy this business for its dividend, you should have an idea of whether More Provident Funds's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for More Provident Funds

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see More Provident Funds paying out a modest 45% of its earnings.

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.

Click here to see how much of its profit More Provident Funds 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see More Provident Funds's earnings have been skyrocketing, up 103% per annum for the past five years.

This is More Provident Funds's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

The Bottom Line

Has More Provident Funds got what it takes to maintain its dividend payments? Companies like More Provident Funds that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating More Provident Funds more closely.

While it's tempting to invest in More Provident Funds for the dividends alone, you should always be mindful of the risks involved. Be aware that More Provident Funds is showing 2 warning signs in our investment analysis, and 1 of those is potentially serious...

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.