Nawi Brothers Group Ltd (TLV:NAWI) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Nawi Brothers Group Ltd (TLV:NAWI) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 21st of March in order to be eligible for this dividend, which will be paid on the 6th of April.

Nawi Brothers Group's next dividend payment will be ₪0.73 per share, on the back of last year when the company paid a total of ₪0.80 to shareholders. Calculating the last year's worth of payments shows that Nawi Brothers Group has a trailing yield of 3.7% on the current share price of ₪21.68. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Nawi Brothers Group can afford its dividend, and if the dividend could grow.

See our latest analysis for Nawi Brothers Group

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. Nawi Brothers Group has a low and conservative payout ratio of just 18% of its income after tax.

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 Nawi Brothers Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Nawi Brothers Group's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Nawi Brothers Group has delivered 4.2% dividend growth per year on average over the past eight years.

To Sum It Up

Has Nawi Brothers Group got what it takes to maintain its dividend payments? Nawi Brothers Group has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating Nawi Brothers Group more closely.

On that note, you'll want to research what risks Nawi Brothers Group is facing. We've identified 4 warning signs with Nawi Brothers Group (at least 1 which is significant), and understanding these should be part of your investment process.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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