Meitav Investment House Ltd (TLV:MTAV) Passed Our Checks, And It's About To Pay A ₪0.19 Dividend

It looks like Meitav Investment House Ltd (TLV:MTAV) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Meitav Investment House's shares on or after the 3rd of June, you won't be eligible to receive the dividend, when it is paid on the 13th of June.

The company's next dividend payment will be ₪0.19 per share. Last year, in total, the company distributed ₪0.83 to shareholders. Calculating the last year's worth of payments shows that Meitav Investment House has a trailing yield of 4.6% on the current share price of ₪17.88. 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.

Check out our latest analysis for Meitav Investment House

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. Fortunately Meitav Investment House's payout ratio is modest, at just 42% of profit.

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

Click here to see how much of its profit Meitav Investment House paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Meitav Investment House's earnings per share have been growing at 15% a year for the past five years.

We'd also point out that Meitav Investment House issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Meitav Investment House has increased its dividend at approximately 3.8% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Meitav Investment House is keeping back more of its profits to grow the business.

Final Takeaway

Should investors buy Meitav Investment House for the upcoming dividend? Companies like Meitav Investment House that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Meitav Investment House ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Meitav Investment House looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, Meitav Investment House has 4 warning signs (and 2 which are a bit concerning) we think you should know about.

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.