Why You Might Be Interested In Meitav Investment House Ltd (TLV:MTAV) For Its Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Meitav Investment House Ltd (TLV:MTAV) is about to go ex-dividend in just three 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Meitav Investment House investors that purchase the stock on or after the 27th of August will not receive the dividend, which will be paid on the 4th of September.

The company's upcoming dividend is ₪0.25 a share, following on from the last 12 months, when the company distributed a total of ₪0.83 per share to shareholders. Last year's total dividend payments show that Meitav Investment House has a trailing yield of 4.7% on the current share price of ₪17.50. If you buy this business for its dividend, you should have an idea of whether Meitav Investment House's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Meitav Investment House

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Meitav Investment House's payout ratio is modest, at just 37% of profit.

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.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Meitav Investment House's earnings per share have risen 17% 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. Meitav Investment House has delivered 3.8% dividend growth per year on average over the past 10 years. 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.

The Bottom Line

Has Meitav Investment House got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the 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. In summary, Meitav Investment House appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Meitav Investment House is facing. Every company has risks, and we've spotted 2 warning signs for Meitav Investment House (of which 1 shouldn't be ignored!) you should know about.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.